Money and Finance Quiz

What is the main purpose of money according to economists?

• D) All of the above

• C) To act as a unit of account

• B) To act as a store of value

• A) To act as a medium of exchange

Which of the following is considered as money by economists?

• C) Rai stones

• B) Feathers

• D) All of the above

• A) Cigarettes

What is Bitcoin and why is it considered as money by many economists?

• D) All of the above

• C) Used for anonymous transactions

• B) A form of digital money

• A) A virtual currency not regulated by a specific country

What is the main function of the stock market in the financial system?

• A) To allow borrowers to crowdsource the money they need to borrow

• B) To spread the risk around for lenders

• C) To allow companies to sell stock to raise capital

• D) All of the above

Why do borrowers use the financial system to raise capital instead of borrowing directly from households?

• B) To accumulate small deposits from thousands of people

• D) All of the above

• A) To spread the risk around

• C) To raise capital from lots of investors

What is the role of banks in the financial system?

• D) All of the above

• C) Spreading savings over different loans

• B) Accumulating small deposits from thousands of people

• A) Safeguarding money while making loans to individual households and businesses

What is the main reason for fluctuations in the stock market?

• A) Changes in economic fundamentals like consumer confidence

• B) Changes in the unemployment rate

• C) Changes in GDP growth

• D) All of the above

Why is it important for individuals to understand lending and borrowing?

• A) To make informed financial decisions

• D) All of the above

• B) To manage personal finances effectively

• C) To understand the functioning of the financial system