Money and Banks

‘Savers suffer as inflation rises to 4.4 %.’

Which function of money is most involved in this statement?

• means of deferred payments

• medium of exchange

• store of value

• unit of account

A stock exchange is a market in which

• a system of barter operates.

• the interest rate is fixed.

• the value of the exchange rate is determined.

• shares are bought and sold.

Which motive is most likely to increase the wish to open a savings account?

• to have cash immediately available

• to prepare for future expenditure

• to satisfy essential needs

• to widen present consumption choices

Why do banknotes function as money?

• They are backed by gold.

• They are durable.

• They are generally acceptable.

• They are generally acceptable.

Which function of money enables people to compare the worth of different products?

• medium of exchange

• standard for deferred payments

• store of value

• unit of account

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

One of the functions of money is to act as a (measure of value) unit of account.

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.

Which statement about a country’s banks is correct?

• Commercial banks hold the financial accounts of the government.

• Commercial banks settle debts by clearing customers’ cheques.

• The central bank sets the government’s tax and spending policies.

• The central bank supplies foreign currency to members of the public.

For anything to be used as money, it must be

• a fixed value.

• in fixed supply.

• legal tender.

• readily acceptable.

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