Money and Banking Quiz

What system was used for transactions before the invention of money?

• Barter System

• Credit System

• Monetary System

• Digital Currency

Which of the following is NOT a limitation of the barter system?

• High Transaction Speed

• Search Cost

• Lack of Common Unit of Measurement

• Lack of Double Coincidence of Wants

What is the primary function of money?

• Store of Value

• Medium of Exchange

• Unit of Account

• Standard of Deferred Payments

Which measure of money supply is considered the narrowest?

• M2

• M4

• M1

• M3

What does High Powered Money consist of?

• Only currency held by the public

• Total deposits with commercial banks

• Currency held by the public and cash reserves of banks

• Only cash reserves of banks

Which of the following is a function of commercial banks?

• Controlling inflation

• Regulating money supply

• Issuing currency

• Accepting deposits

What is the role of the central bank in an economy?

• To create credit for businesses

• To accept deposits from the public

• To provide loans to individuals

• To issue currency

Which of the following is a quantitative method of credit control?

• Moral Suasion

• Credit Rationing

• Open Market Operations

• Margin Requirements

What is the Cash Reserve Ratio (CRR)?

• The percentage of deposits banks must keep as reserves with themselves

• The amount of loans given by banks

• The percentage of deposits banks must keep as reserves with the Central Bank

• The interest rate on savings accounts

What is the main source of income for commercial banks?

• Issuing currency

• Selling foreign exchange

• Extending loans and advances

• Accepting deposits