2/25 Econ entry quiz

One of the functions of money is to act as a measure of value. What does this mean?

• Money allows people to borrow and lend.

• Money allows people to save their surplus Income.

• Money is used to buy goods and services

• Money is used to compare the worth of different goods and services

The use of a mobile (cell) phone to make payments is an example of which function of money?

• a medium of exchange

• a standard of deferred payment

• a store of wealth

• a unit of account

What is a function of a central bank?

• to decide government spending

• to determine all interest rates

• to issue new currency

• to lend to private businesses

What is a function of a commercial bank?

• acting as the lender of last resort

• deciding what is a legal tender

• determining monetary policy

• providing overdrafts

Sara works in a local office as a secretary three days a week. She lives with her parents in a small apartment. Lara owns a successful fitness centre that employs about twenty people and lives in a large house. Which is likely to be true?

• Sara spends a smaller proportion of her income than Lara.

• Sara saves most of her income

• Sara would find it easier than Lara to borrow money.

• Sara has a lower disposable income than Lara.

What would be most likely to encourage saving?

• An increase in the exchange rate

• An increase in the goods and services tax rate

• An increase in the income tax rate

• An increase in the interest rate

Which statement about different income groups is true

• High income groups do not need to borrow money.

• High income groups save less money than low income groups

• Low income groups find it easier to borrow than high income groups

• Low income groups save a smaller percentage of their income than high income groups.

Which group is likely to save the largest proportion of its income?

• employed workers

• retired people

• school students

• unemployed workers

What will lead to an increase in spending?

• an increase in the rate of unemployment

• a reduction in the rate of interest

• a reduction in expenditure by firms on advertising

• an increase in the rate of income tax

A person is keen to repay a large debt owed on his credit card. What is likely to cause that person to reduce the credit Card repayment and spend more from his weekly wage?

• A an increase In interest rates

• an increase in the vice of essential products

• an increase in the range of products available

• an increase in weekly earnings