Money and banking (AED)

Money functions as a _____

• medium of exchange

• measure of value

• store of value

• all correct

If George keeps a part of his earnings as cash in a safety deposit box, he is employing money as a ______

• Store of value

• measure of value

• medium of exchange

• None is correct

Commodity money can best be defines as ______

• an item that serves the function of money, but has no value as anything else

• an item that serves the function of money and has other uses

• the price of currency in relation to another

• All correct

Which of the following determines the amount a bank can lend to its customers?

• Non-performing loans

• Required reserve

• Excess reserve

• Non is correct

The basic functions of ______ include accepting deposits from individuals and firms and providing loans to the public

• a commercial bank

• Bank Negara Malaysia

• an insurance company

• All are correct

One cause for people holding money is to pay for unexpected medical bills and other unpredictable expenses. This motive for holding money is called _____

• transaction motive

• precautionary motive

• speculative motive

• spending motive

Bank Negara Malaysia is frequently considered as banker to the banks because it _____

• accepts deposits from the public

• lowers the discount rate in order to restrict the money supply

• holds bankers' reserves, provides banks with currency and loans, and clears their checks

• has no monopoly power in printing paper currency

Which of the following may increase money supply in an economy?

• an increase in reserve requirement

• a decrease in the discount rate

• an increase in the discount rate

• Bank Negara Malaysia selling government securities in the open market

The main job of Bank Negara Malaysia is to ____

• control of the rate of growth of the money supply

• manage the national debt and foreign exchange

• provide low- interest loans to all financial institutions

• print paper currency

Which of the following motives of holding money depends on the level of interest rate?

• Precautionary motive only

• Precautionary motive, transactions motive and speculative motive

• speculative motive and precautionary motive

• speculative motive only