This quiz works best with JavaScript enabled. Home > Finance > Money And Banking > Money And Banking – Quiz 12 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Money And Banking Quiz 12 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Higher-than-normal interest rates caused by heavy government borrowing hurts private borrowers through ..... A) Deficit spending. B) Spending caps. C) Crowding out effect. D) "pay-as-you-go" provision. Show Answer Correct Answer: C) Crowding out effect. 2. Means of comparing goods and services A) Medium of Exchange. B) Unit of Account. C) Uniformity. D) Store of Value. Show Answer Correct Answer: B) Unit of Account. 3. What is the ratio of deposits which commercial banks are required to keep with themselves called? A) CRR. B) SLR. C) Both. D) None of above. Show Answer Correct Answer: B) SLR. 4. A commercial bank chartered by the federal government. A) Money Supply. B) Gold Standard. C) National Bank. D) Bank. Show Answer Correct Answer: C) National Bank. 5. Money is the most liquid of all the asset because A) It is a medium of exchange. B) It is an unit of account. C) It act as a store of value. D) It is a standard of deferred payment. Show Answer Correct Answer: A) It is a medium of exchange. 6. Now that he has retired, he lives partly on his pension and partly on the ..... his post office savings account. A) Salary. B) Income. C) Wages. D) Interest. Show Answer Correct Answer: D) Interest. 7. Anything that people will accept as payment for goods and service A) Barter. B) Medium of exchange. C) Debit cards. D) Money. Show Answer Correct Answer: D) Money. 8. Inflation is to be combated the RBI- A) Raise in CRR and lower SLR. B) Lower CRR and raise SLR. C) Raise both CRR and SLR. D) None of these. Show Answer Correct Answer: C) Raise both CRR and SLR. 9. The federal funds rate is the rate: A) A bank would pay the Federal Reserve for a loan. B) The Federal Reserve would pay to borrow money from government. C) One bank would pay another bank for a loan. D) A private borrower would pay a bank for a loan. Show Answer Correct Answer: C) One bank would pay another bank for a loan. 10. What of the following is a typical start up requirement for a sole proprietorship? A) Selling shares on the stock market. B) Obtaining a business license. C) Hiring officers to run the company. D) Signing a contract with a partner. Show Answer Correct Answer: B) Obtaining a business license. 11. If Rose purchased a new computer and paid by credit card, she is using money as A) A store of value. B) A measure of value. C) A medium of exchange. D) A standard of deferred payment. Show Answer Correct Answer: D) A standard of deferred payment. 12. Money that can be easily divided into smaller units of value has the characteristic of A) Exchange. B) Durability. C) Divisibility. D) Denominations. Show Answer Correct Answer: C) Divisibility. 13. Who appoints the chairman of the Federal Reserve? A) The American poeple. B) Supreme Court. C) President. D) Congress. Show Answer Correct Answer: C) President. 14. The potential amount of money that banks can create based on the initial deposit. A) Bank Failures. B) Money Multiplier. C) Potential Money Creation Formula. D) Open Market Operations. Show Answer Correct Answer: B) Money Multiplier. 15. Buying and selling US government securities (bonds) to raise and lower interest rates A) Fed Fund Rate. B) Discount Rate. C) Open Market Operation. D) Reserve Requirement Rate. Show Answer Correct Answer: C) Open Market Operation. 16. Which of these is a fiat currency used in the colony of Connecticut in 1645? A) Wampum. B) Wigwam. C) Cheese. D) Tomtoms. Show Answer Correct Answer: A) Wampum. 17. When money serves as a mechanism for transforming current income into future purchases, it is functioning as a A) Medium of exchange. B) Standard of value. C) Standard of account. D) Store of value. Show Answer Correct Answer: D) Store of value. 18. In the 1800's, people in mining towns in the West often paid for goods with gold nuggets or gold dust. What was the function of gold? A) It was used as respresentative money. B) It was used as part of a barter system. C) It was used as a currency. D) It was used as fiat money. Show Answer Correct Answer: C) It was used as a currency. 19. John asked his parents if they would pay off his ..... A) Credits. B) Debts. C) Rents. D) Accounts. Show Answer Correct Answer: B) Debts. 20. The process of spreading your assets among several different types of investments to reduce risks A) Common Stock. B) Dividends. C) Emergency Fund. D) Diversification. Show Answer Correct Answer: D) Diversification. 21. What is the current central banking system of the United States called? A) Federal Reserve System. B) Federal Deposit Insurance Corporation (FDIC). C) National Bank. D) 1st Bank of the United States. Show Answer Correct Answer: A) Federal Reserve System. 22. Bartering is difficult if high value items cannot be broken up into smaller value items in order to exchange for low value items A) Double coincidence of wants. B) Portability. C) Divisibility. D) None of above. Show Answer Correct Answer: C) Divisibility. 23. Bonds are very safe investments. Which is true of AAA ratings. A) They are hihg-risk investments. B) They have low interest rates. C) They mature quickly. D) They have high interestrates. Show Answer Correct Answer: B) They have low interest rates. 24. The higher the LRR credit creation will be A) Higher. B) Lower. C) Constant. D) None of these. Show Answer Correct Answer: B) Lower. 25. What happens during a bank run? A) The federal government orders all banks to close. B) States charter more banks than their citizens need. C) The price of gold specie suddenly increases. D) Customers try to withdreaw more money than the bank has on hand. Show Answer Correct Answer: D) Customers try to withdreaw more money than the bank has on hand. 26. Which of the following describes the risk and return profile of savings bonds? A) High risk, low return. B) High risk, high return. C) Low risk, high return. D) Low risk, low return. Show Answer Correct Answer: D) Low risk, low return. 27. People work mainly to ..... money. A) Win. B) Finance. C) Pay. D) Earn. Show Answer Correct Answer: D) Earn. 28. An essential function for a bank is to A) Maximize its assets. B) Create money through lending. C) Lend all of its deposits. D) Minimize its reserve ratio. Show Answer Correct Answer: B) Create money through lending. 29. Bank belonging to the Federal Reserve System. A) Central Bank. B) Member Bank. C) Liquidity. D) Default. Show Answer Correct Answer: B) Member Bank. 30. Financial Institutions include: A) Banks. B) Savings & Loans. C) Credit Unions. D) All of the above. Show Answer Correct Answer: D) All of the above. ← PreviousNext →Related QuizzesFinance QuizzesMoney And Banking Quiz 1Money And Banking Quiz 2Money And Banking Quiz 3Money And Banking Quiz 4Money And Banking Quiz 5Money And Banking Quiz 6Money And Banking Quiz 7Money And Banking Quiz 8Money And Banking Quiz 9 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books