Standard SSEPF3 Money Review Quiz

What is NOT a function of money?

• Medium of exchange

• Store of value

• Source of natural resources

• Unit of account

What does the money supply refer to?

• The total value of gold reserves in a country

• The amount of money borrowed by the government

• The total stock of money in circulation in an economy at a specific time

• The total savings of the population of a country

What factor does NOT directly affect money demand?

• Interest rates

• Inflation

• Population size

• Income levels

What is the primary goal of monetary policy?

• To ensure the stability of the government

• To control inflation and stabilize the currency

• To increase the country's exports

• To reduce the unemployment rate to zero

Which of the following is an example of fiat money?

• Gold coins

• Silver certificates

• U.S. dollars

• Bitcoin

What is the primary reason for holding money according to the theory of liquidity preference?

• To trade it for goods and services

• As a precaution against future needs

• For speculative purposes, hoping to profit from future market movements

• All of the above

What happens when the money supply increases?

• Interest rates increase

• Interest rates decrease

• The value of money increases

• The stock market automatically crashes

What is the term for money that must be accepted in payment of debts by law?

• Commodity money

• Legal tender

• Fiat money

• Representative money

What is the primary function of the central bank in relation to monetary policy?

• To insure deposits in commercial banks

• To act as a lender of last resort

• To collect taxes

• To manage the country's foreign exchange reserves

How does inflation affect the demand for money?

• It increases the demand for money because people need more money to buy the same goods

• It decreases the demand for money because people prefer to hold onto goods instead

• It has no effect on the demand for money

• It initially increases the demand for money but decreases it in the long term