OCR Eco: Chap 18 Money and Interest

Which of the following is NOT a function of money?

• Medium of Exchange

• Unit of Account

• Store of Value

• Production of Goods

Which characteristic of money is demonstrated by coins and banknotes being made of durable materials?

• Durability

• Portability

• Divisibility

• Uniformity

Why is portability an important characteristic of money?

• It ensures money can withstand wear and tear

• It allows money to be easily carried and transferred

• It ensures money can be divided into smaller units

• It ensures each unit of money is identical

What is narrow money?

• Money that includes time deposits and savings accounts

• The most liquid forms of money used for transactions

• Money that requires notice before accessing

• Money that is only in the form of digital currency

Which of the following is considered part of broad money?

• Physical currency only

• Demand deposits only

• Time deposits and savings accounts

• Only money that can be withdrawn immediately

What does the variable 'M' represent in the Fisher Equation of Exchange?

• Money supply

• Velocity of money

• Price level

• Volume of transactions

Why do lower interest rates make borrowing more attractive for individuals and businesses?

• Because it increases the money supply

• Because it decreases the price level

• Because it makes borrowing more affordable

• Because it increases the volume of transactions

What can shift the demand and supply curves, leading to changes in the equilibrium interest rate?

• Changes in weather conditions.

• Changes in economic conditions, monetary policy, and investor sentiment.

• Changes in technological advancements.

• Changes in population growth.

What is the primary function of money as a medium of exchange?

• It allows for easy comparison of prices.

• It eliminates the need for barter.

• It serves as a store of value.

• It enables individuals to make purchases on credit.

Which characteristic of money makes it easy to carry and transfer from one person to another?

• Durability

• Portability

• Divisibility

• Uniformity