Chapter 1: Introduction to Money and Banking

What is the primary function of money?

• To serve as a store of wealth

• To facilitate transactions

• To provide credit

• To track investments

Which of the following is NOT a function of money?

• Medium of exchange

• Unit of account

• Risk management

• Store of value

What distinguishes cryptocurrencies from traditional money?

• They are issued by central authorities

• They are primarily digital and decentralized

• They are less volatile

• They are used only for online purchases

Which institution serves as the primary monetary authority in a country?

• Commercial bank

• Investment bank

• Central bank

• Credit union

Which of the following is an example of a cooperative society providing savings and loan services?

• Commercial bank

• Credit union

• Investment bank

• Central bank

What is the primary role of commercial banks in the financial system?

• To issue currency

• To provide investment advice

• To accept deposits and make loans

• To regulate monetary policy

Which of the following is a potential risk associated with cryptocurrencies?

• Low transaction fees

• High volatility

• Increased financial inclusion

• Enhanced security

What is a primary function of a development bank?

• To provide savings accounts

• To fund economic development projects

• To offer personal loans

• To facilitate stock trading

How do digital currencies enhance financial inclusion?

• By eliminating traditional banking

• By providing access to financial services for unbanked populations

• By increasing transaction fees

• By requiring physical branches

Which of the following describes the term 'disintermediation' in finance?

• The introduction of more intermediaries

• The reduction of intermediaries in transactions

• The regulation of intermediaries

• The formation of new banks