Economics Quiz Lesson 3 Money and Banking

What are the three functions of money?

• Interest rate, assets, income

• Medium of exchange, store of value, unit of account

• Barter, savings, investment

• Inflation, stocks, borrowing

What is money?

• Something that people will accept as payment for goods and services

• A yardstick of economic value in exchanges

• Percentage of the total amount of money loaned or borrowed

• Things of economic value that a person or company owns

What are the main functions of banks?

• Store money, earn money, borrow money

• Trade goods and services, measure costs, earn income

• Invest money, save money, lend money

• Buy money, sell money, charge interest

What is savings?

• Income not spent on immediate wants

• Use of money today in a way that earns future benefits

• Percentage of the total amount of money loaned or borrowed

• Things of economic value that a person or company owns

What is the function of money that allows people to measure the relative costs of goods and services?

• Interest rate

• Unit of account

• Medium of exchange

• Store of value

How do banks earn money?

• By charging interest or fees for their services

• By borrowing money from customers

• By storing money for customers

• By loaning money to other customers

What are common options for saving money?

• Savings accounts, certificates of deposit (CDs), stocks

• Interest rate, assets, income

• Barter, trade, investment

• Inflation, stocks, borrowing

What happens to a stock owner if the stock price increases?

• They borrow money

• They lose money

• They earn interest

• They make money

Why might a person invest in CDs rather than savings?

• CDs have a lower risk of losing money

• CDs can be used at any time

• CDs offer a higher interest rate

• CDs are easily available

Why are the interest rates not the same for borrowing and lending?

• Banks charge a higher interest rate for loans than they pay for savings accounts

• Banks charge a lower interest rate for loans than they pay for savings accounts

• Banks charge the same interest rate for loans and savings accounts

• Banks do not charge interest for loans or savings accounts