This quiz works best with JavaScript enabled. Home > Money And Banking > Money And Banking – Quiz 1 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Money And Banking Quiz 1 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Money whose value is based on the type of material from which it is made is called A) FIAT. B) Representative money. C) Commodity money. D) Near money. Show Answer Correct Answer: C) Commodity money. 2. In 1913, Congress created "the Fed" responsible for ..... A) Managing the budget. B) Regulating banks. C) Establishing trade agreements. D) None of above. Show Answer Correct Answer: B) Regulating banks. 3. Carl wants a new computer. He goes to 6 different stores on the weekend comparing prices. Carl is using money as A) A store of value. B) A medium of exchange. C) Commodity money. D) A unit of account. Show Answer Correct Answer: D) A unit of account. 4. Expenses that can or go up or down each month A) Merry-go-round Expenses. B) Fixed Expenses. C) Shifty Expenses. D) Variable Expenses. Show Answer Correct Answer: D) Variable Expenses. 5. Which one is the Bank of the Public? A) Commercial Bank. B) Central Bank. C) Both (a) and (b). D) None of the above. Show Answer Correct Answer: A) Commercial Bank. 6. Money is functioning as a standard of value when you A) Use it to compare two houses that are different prices. B) Buy jeans at the mall. C) Buy a rare baseball card that you expect will increase in value. D) Trade a cup of sugar for two eggs. Show Answer Correct Answer: A) Use it to compare two houses that are different prices. 7. The item must physically last and will not wear out too quickly to be useful as money A) Durable. B) Acceptable. C) Divisible. D) Scarce. Show Answer Correct Answer: A) Durable. 8. Two units of the same type of money must be the same in terms of what they will buy. A) Durability. B) Limited Supply. C) Portability. D) Uniformity. Show Answer Correct Answer: D) Uniformity. 9. A banking system that keeps only a small portion of deposits on hand and lends out the rest. A) Fractional Reserve Banking. B) Federal Reserve System. C) Federal Deposit Insurance Corporation. D) Credit Union. Show Answer Correct Answer: A) Fractional Reserve Banking. 10. Which of the following will increase money supply? A) Fall in repo rate. B) Purchase of securities in open market. C) Decrease in cash reserve ratio. D) All of these. Show Answer Correct Answer: D) All of these. 11. What is the value of money multiplier when initial deposits are ₹ 500 crores and LRR is 10 percent? A) 0.1. B) 0.2. C) 10. D) 20. Show Answer Correct Answer: C) 10. 12. An agreement to purchase or sell stocks for a specified price until a date in the future is reached A) Options. B) Default. C) Mutual Fund. D) Diversification. Show Answer Correct Answer: A) Options. 13. What is the annual percentage rate (APR) A) Annual rate (including fees) paid for borrowed money. B) Interest on a mortgage. C) A bank fee. D) All of the above. Show Answer Correct Answer: A) Annual rate (including fees) paid for borrowed money. 14. If the reserve requirement is 20%, the existence of $ 100 worth of excess reserves in the banking system can lead to a maximum expansion of the money supply equal to A) $ 200. B) $ 500. C) $ 750. D) $ 1000. Show Answer Correct Answer: B) $ 500. 15. The term used to describe the ease and speed with which you can convert savings or an investment to cash is: A) Convertibility. B) Principal. C) Liquidity. D) Rate of return. Show Answer Correct Answer: C) Liquidity. 16. Each of the following FED actions will contract the money supply except A) Raise the reserve ratio. B) Raise the discount rate. C) Raise the Federal Funds rate. D) Buy bonds. Show Answer Correct Answer: D) Buy bonds. 17. Which of the following refers to checks that have been written but not cashed? A) Cancelled check. B) Demand deposits. C) Outstanding checks. D) Bank statements. Show Answer Correct Answer: C) Outstanding checks. 18. The buying and selling of government bonds in financial markets is A) Monetary Policy. B) Responsibilities of the FED. C) Golden Standard. D) Open Market Operations. Show Answer Correct Answer: D) Open Market Operations. 19. Government-issued coins and paper notes that may be used to exchange goods and services; essentially, the physical representation of money A) Currency. B) Representative Money. C) Fiat Money. D) Commodity Money. Show Answer Correct Answer: A) Currency. 20. Which of the following is NOT a function money serves in the economy? A) Medium of exchange. B) Store of value. C) Standard of value. D) Value added commodity. Show Answer Correct Answer: D) Value added commodity. 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