Economics Quiz - Money

The term 'money supply' refers to the:

• Total stock of money in an economy at any moment

• Total asset base of the institutions in the financial sector

• Amount of money traded in the foreign exchange market

• Total amount of gold, silver and other precious metals in reserve

Money is long-lasting, easy to carry around and can be changed with smaller denominations. Which of the following characteristics of money are being described in the statement above.

• Durability, portability, liquidity

• Durability, scarcity, liquidity

• Durability, portability, divisibility

• Portability, uniformity, divisibility

Justin purchases shares in the credit union with one half of his salary every month in order to later purchase a sports car. Which function of money is this half of his salary performing?

• A store of value

• A medium of exchange

• A standard of deferred payment

• A standard of deferred exchange

Rob and Steele joined an underground group that was printing counterfeit money. Which quality of money is the group eroding?

• Durability

• Portability

• Acceptability

• Authenticity

Which of the following must remain stable if money is to successfully function as a store of value?

• Employment

• Prices

• The exchange rate

• The rate of interest

What is the MAIN reason people hold onto money?

• To buy what they need

• To save for the future

• To invest in bonds

• To deposit in savings

What is the term used to describe the money people keep for unexpected events like a car repair?

• Transactions demand for money

• Precautionary demand for money

• Speculative demand for money

• Liquidity preference

What is the relationship between the amount of money people hold for transactions and their income?

• There is no relationship between income and the amount of money people hold for transactions.

• People with higher incomes tend to hold less money for transactions.

• People with higher incomes tend to hold more money for transactions.

• People with higher incomes tend to hold the same amount of money for transactions as people with lower incomes.

What is the term used to describe the overall desire for people to hold money rather than invest it?

• Transactions demand for money

• Liquidity preference

• Precautionary demand for money

• Speculative demand for money

What is the definition of broad money?

• Notes and coins, all chequing accounts and travellers' cheques

• Notes and coins plus savings deposits and money market accounts

• M1 plus money market accounts only

• M1 plus savings deposits and money market accounts