This quiz works best with JavaScript enabled. Home > Finance > Money And Banking > Money And Banking – Quiz 14 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Money And Banking Quiz 14 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Anything that serves as a medium of exchange, a unit of account, and a store of value A) Unit of Account. B) Services. C) Money. D) Goods. Show Answer Correct Answer: C) Money. 2. You are a financial advisor whose client is concrenced about losing his investment if a company goes out of business. You advise her to buy A) Income stock. B) Common stock. C) Growths tock. D) Preferred stock. Show Answer Correct Answer: D) Preferred stock. 3. Maria makes a deposit of $ 10, 000 into her Smalltown Bank savings account. Smalltown Bank holds 20% of her deposit, then lends the remaining $ 8, 000 to Ben to buy a new car. This practice of retaining only a portion of deposits on hand is called A) The gold standard. B) Fractional reserve banking. C) The Federal Reserve system. D) Representative money. Show Answer Correct Answer: B) Fractional reserve banking. 4. To start their business, the Kowalskis needed a ..... A) Lease. B) Grant. C) Loan. D) None of above. Show Answer Correct Answer: C) Loan. 5. Which of the following is the most liquid monetary aggregate? A) M2. B) M3. C) Dollar bills. D) M1. Show Answer Correct Answer: D) M1. 6. Money comes into the FED, and in exchange, the FED issues a bond certificate to the buyer of the bond. the Net result is A) Money disappears from circulation. B) The money supply decreases. C) Money is added to circulation. D) The money supply decreases. E) 1 and 2. Show Answer Correct Answer: E) 1 and 2. 7. Minnesota is a part of the ..... Reserve District. A) 5th. B) 11th. C) 9th. D) None of above. Show Answer Correct Answer: C) 9th. 8. If the reserve ratio is 25% and Ray deposits $ 100 in the bank the result will be A) $ 400 in money destruction. B) $ 100 in money destruction. C) $ 400 in money creation. D) $ 100 in money creation. Show Answer Correct Answer: C) $ 400 in money creation. 9. Interest earned on both principal and previous interest earnings A) Complicated Interest. B) Compound Interest. C) Special Interest. D) Complex Interest. Show Answer Correct Answer: B) Compound Interest. 10. How easy it is to convert an asset into cash A) Liquidity. B) Savings account. C) Reconcile. D) Fiat money. Show Answer Correct Answer: A) Liquidity. 11. The largest portion of the money supply is ..... A) Currency. B) Demand deposits. C) Traveler's checks. D) None of above. Show Answer Correct Answer: A) Currency. 12. What would make an item unsuitable to act as money? A) Its is easy to carry. B) It is generally acceptable. C) It is recognizable. D) It is perishable. Show Answer Correct Answer: D) It is perishable. 13. One of the disadvantages of operating a barter system is that trading is A) Taking place without currency. B) Carried out in very large markets. C) Limited by availability and demand of goods traded. D) Conducted without consumer protections. Show Answer Correct Answer: C) Limited by availability and demand of goods traded. 14. All of the following are low-risk investments EXCEPT A) Municipal bonds. B) Savings bonds. C) Junk bonds. D) Treasury bonds. Show Answer Correct Answer: C) Junk bonds. 15. When the Fed buys bonds, which of the following occurs? A) The money supply increases, and interest rates increase. B) The money supply increases, and interest rates decrease. C) The money supply decreases, and interest rates decrease. D) The money supply decreases, and interest rates stay the same. Show Answer Correct Answer: B) The money supply increases, and interest rates decrease. 16. Scarcity is important as an economic characteristic of money because ..... A) We need to have plenty of money in circulation. B) Too much money in circulation makes it worth less. C) The more you have the better off you are. D) None of above. Show Answer Correct Answer: B) Too much money in circulation makes it worth less. 17. Which one is the difficulty of the Barter System? A) Lack of Double Coincidence. B) Difficulty of Division of the Goods. C) Lack of General Acceptable Measure of Value. D) All the above. Show Answer Correct Answer: D) All the above. 18. One of the physical properties of money is A) Stability of value. B) Portability. C) Acceptability. D) Scarcity. Show Answer Correct Answer: B) Portability. 19. If you're got a student card, you can get into the exhibition free of ..... A) Charge. B) Price. C) Cost. D) Expense. Show Answer Correct Answer: A) Charge. 20. High powered money consists of: A) Currency and coins held by the public. B) Currency and demand deposits. C) Currency, cash reserves with banks and demand deposits. D) Currency held by the public and cash reserves with banks. Show Answer Correct Answer: D) Currency held by the public and cash reserves with banks. 21. The amount paid by a borrower to a lender in exchange for the use of the lender's money usually expressed as a percentage. A) Interest rate. B) Loan. C) Credit score. D) Foreclosure. Show Answer Correct Answer: A) Interest rate. 22. A member of the Board of Governor serves for A) 8 years. B) 4 years. C) 14 years. D) 10 years. Show Answer Correct Answer: C) 14 years. 23. What kind of interest includes "interest paid on interest" ? A) Complex interest. B) Profit. C) Compound interest. D) Simple interest. Show Answer Correct Answer: C) Compound interest. 24. After my business failed, I was declared ..... by the court. A) Uneconomical. B) Profitless. C) Insignificant. D) Bankrupt. Show Answer Correct Answer: D) Bankrupt. 25. When Mr. Moore gets his paycheck, he knows he doesn't have to spend it all at once because money is A) Standard of Value. B) Medium of Exchange. C) Store of Value. D) Representative money. Show Answer Correct Answer: C) Store of Value. 26. People can trade in goods and services which feature of money does this describe? A) Unit of account. B) Standard of deferred payments. C) Medium of exchange. D) Store of value. Show Answer Correct Answer: C) Medium of exchange. 27. The direct exchange of one set of goods or services for another A) Barter System. B) Store of Value. C) Medium of Exchange. D) Currency Exchange. Show Answer Correct Answer: A) Barter System. 28. What services do banks provide? A) Store money. B) Customers can earn money. C) Borrow money. D) All of the above. Show Answer Correct Answer: D) All of the above. 29. Kanye has $ 12, 000 in cash and he deposits it in Kardashian National Bank. How much does M1 change? A) $ 12, 000 x the monetary multiplier. B) $ 12, 000. C) It doesn't change, cash and checks are both M1. D) $ 12, 000 less the required reserves. Show Answer Correct Answer: C) It doesn't change, cash and checks are both M1. 30. The earliest financial-services company was formed by the ..... A) Knights Templars. B) Egyptians. C) Greeks. D) None of above. Show Answer Correct Answer: A) Knights Templars. ← 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