This quiz works best with JavaScript enabled. Home > Finance > Money And Banking > Money And Banking – Quiz 24 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Money And Banking Quiz 24 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. The ability to be used as, or easily converted into, cash is called A) Demand deposit. B) Money market. C) Amortization. D) Liquidity. Show Answer Correct Answer: D) Liquidity. 2. The demand for money consists of A) M1 plus M2. B) The tools of the Fed. C) Asset demand plus transactions demand. D) Checkable deposits and savings accounts. Show Answer Correct Answer: C) Asset demand plus transactions demand. 3. When you pay for a new CD with a debit card, you authorize the transfer of money from your account to the music store's account. In other words, a payment by debit card is the electronic form of a payment by A) Money order. B) Credit card. C) Check. D) Cashier's check. Show Answer Correct Answer: C) Check. 4. Memphis is in which Federal Reserve district? A) Chicago. B) Dallas. C) Atlanta. D) S. Louis. Show Answer Correct Answer: D) S. Louis. 5. Money, property, and other goods that have value. A) Physical capital. B) Cash. C) Credit. D) Asset. Show Answer Correct Answer: D) Asset. 6. An essential function for banks is creating money by A) Storing all of the deposits. B) Loaning a portion of deposits. C) Loaning all of the deposits. D) None of the above. Show Answer Correct Answer: B) Loaning a portion of deposits. 7. Bradley digs out $ 50 from his cookie jar and deposits it in his checking account. The immediate result of this transaction is that M1 has A) Increased by less than $ 50. B) Increased by more than $ 50. C) Not changed. D) Increased by $ 50. Show Answer Correct Answer: C) Not changed. 8. Which of the following changes would cause an increase in the equilibrium nominal interest rate? A) An increase in real income. B) An increase in the monetary base. C) A decrease in the amount of cash the public wants to hold. D) An increase in the money supply. E) A decrease in the price level. Show Answer Correct Answer: A) An increase in real income. 9. Bartering requires that the seller and the buyer want what the other has for exchange, otherwise the transaction cannot take place A) Double coincidence of wants. B) Portability. C) Divisibility. D) None of above. Show Answer Correct Answer: A) Double coincidence of wants. 10. Supply-side policies aim to ..... . A) Strengthen the economy by increasing taxes. B) Reduce the government's role in the economy. C) Strengthen the government's role in the economy. D) Increase regulation of corporations. Show Answer Correct Answer: B) Reduce the government's role in the economy. 11. Which financial product has the most predictable income? A) Real estate. B) Option/future contract. C) Certificate of deposit. D) Stock. Show Answer Correct Answer: C) Certificate of deposit. 12. Unit of Account: A) Money is a measurement of value. B) Money is accepted in exchange for goods/services. C) Money can maintain value over time. D) None of above. Show Answer Correct Answer: A) Money is a measurement of value. 13. Which of these is an example of M1? A) Property. B) Cash. C) Savings deposits. D) Credit. Show Answer Correct Answer: B) Cash. 14. In the United States, the dollar is A) Backed by silver. B) Backed by gold and silver. C) Fiat money. D) Commodity money. Show Answer Correct Answer: C) Fiat money. 15. What is the term for a business in which none of the co-owners is responsible for the debts or mistakes of the others? A) Partnership. B) General partnership. C) Limited partnership. D) Limited partnership. Show Answer Correct Answer: C) Limited partnership. 16. A stock that signifies partial ownership of a company A) Day Trading. B) Return. C) Portfolio. D) Share. Show Answer Correct Answer: D) Share. 17. In fractional reserve banking ..... A) All funds are held in reserve. B) Annual payments are required. C) A percentage is kept in the bank. D) None of above. Show Answer Correct Answer: C) A percentage is kept in the bank. 18. Borrowing money to make risky investments while hoping to make a large return A) Day Trading. B) Share. C) Diversification. D) Speculation. Show Answer Correct Answer: D) Speculation. 19. If the reserve requirement is 25% and banks hold no excess reserves, an open market sale of $ 400, 000 of government securities by the Federal Reserve will A) Increase the money supply by up to $ 300, 000. B) Decrease the money supply by up to $ 1.6 million. C) Increase the money supply by up to $ 100, 000. D) Decrease the money supply by up to $ 100, 000. Show Answer Correct Answer: B) Decrease the money supply by up to $ 1.6 million. 20. What is the relationship between interest rates and demand for money? A) As interest rates decrease, demand for money increases. B) As interest rates increase, demand for money increases. C) Interest rates are determined by demand for money. D) Interest rates and demand for money are unrelated. Show Answer Correct Answer: A) As interest rates decrease, demand for money increases. 21. The company fell deeper and deeper into the ..... and then went bankrupt. A) Red. B) Black. C) Yellow. D) Green. Show Answer Correct Answer: A) Red. 22. ..... is the rate at which the central bank borrow funds from commercial bank A) SLR. B) CRR. C) Reverse repo rate. D) Bank rate. Show Answer Correct Answer: C) Reverse repo rate. 23. What is the purpose of the Board of Governors? A) To set the value of money. B) To say how much money will be printed in a year. C) To help elect the president. D) To set policies for the FED and its members banks to follow. Show Answer Correct Answer: D) To set policies for the FED and its members banks to follow. 24. The federal funds rate is the interest rate that A) The Fed charges the federal government on its loans. B) Equalizes the yield on government bonds and corporate bonds. C) Banks charge one another for short-term loans. D) Is equal to the inflation rate. Show Answer Correct Answer: C) Banks charge one another for short-term loans. 25. Which of the following perform the fewest functions of money? A) Banknotes. B) Demand deposits. C) Negotiable certificates of deposit. D) Savings deposits. Show Answer Correct Answer: C) Negotiable certificates of deposit. 26. In institution that accepts deposits and makes loans is: A) A loan shark. B) A bank. C) A paycheck cashing company. D) An insurance company. Show Answer Correct Answer: B) A bank. 27. ..... a system in which currency could be exchanged for a certain amount of gold. A) Legal tender. B) Gold Standard. C) FDIC. D) Specie. Show Answer Correct Answer: B) Gold Standard. 28. A good tax should be all of these but? A) Simple. B) Overbearing. C) Efficient. D) Equal. Show Answer Correct Answer: B) Overbearing. 29. To act as money, an item should be homogeneous and recognizable. Which characteristics of money does this describe? A) Acceptability. B) Uniformity. C) Scarcity. D) Durability. Show Answer Correct Answer: B) Uniformity. 30. The following is information about the central bank and its description:By acting in this way, the central bank can have tighter control over the ability of banks to lend and create credit; it also makes transfers between banks more efficient. A) The sole issuer of notes and coins. B) The government's bank. C) The bankers' bank. D) Lender of the last resort. Show Answer Correct Answer: C) The bankers' bank. ← 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