Currency and Money Quiz

What are the four types of money?

• Commodity money, fiat money, fiduciary money, and commercial bank money

• Gold, silver, bronze, and copper

• Cash, credit, debit, and checks

• Coins, notes, bonds, and stocks

What is money? What is it used for?

• A medium of exchange

• A type of food

• A form of entertainment

• A kind of clothing

When inflation is high, which function of money is impacted the most?

• Store of value

• Medium of exchange

• Unit of account

• Standard of deferred payment

Why is money necessary for an economy to operate efficiently?

• It allows for the efficient exchange of goods and services.

• It creates a barter system.

• It eliminates the need for trade.

• It reduces the value of goods.

Which of the following describes the function of money as a medium of exchange?

• You use your debit card to pay for a sandwich.

• You see that a new computer will cost you $800.

• You keep $1,000 in your safe in case of an emergency.

• You go to the store to purchase a new laptop. In exchange for the laptop, you give the person working at the store money.

• Money is used to compare the costs to purchase different goods and services.

Why was money created?

• As a means of taking advantage of people in lower income brackets.

• To reduce the costs of making transactions in the economy.

• It was created by the central bank to control interest rates.

• To provide the government with quick tax revenue.

The government issues a new two-dollar and fifty cent bill. What is the intrinsic value of the new currency?

• $2.50

• Nothing

• $2.50 plus or minus nominal interest

• Always greater than $2.50

• $2.50 plus or minus inflation

Money that has an intrinsic value is called what?

• Fiat money

• Commodity money

• Digital currency

• Cryptocurrency

How does inflation prevent most of the money in use today from serving as a pure store of value?

What is the fractional reserve banking system?

• A banking system where banks keep a fraction of deposits as reserves and use the rest for loans

• A system where banks keep all deposits as reserves

• A system where banks do not keep any reserves

• A system where banks only provide loans and do not accept deposits