UNIT 6

What is the primary function of the central bank?

• Collect taxes.

• Issue the nation’s currency

• Provide insurance services

• Operate savings institutions

Which tool is used to regulate the money supply?

• Reserve requirement.

• Income tax.

• International trade agreements

• Loan approvals

What is a share-draft account?

• A. An account for government funds.

• B. A type of savings account in banks.

• C. A version of a checking account provided by credit unions.

• D. A corporate investment account.

Fiat money is also known as:

• A. Commodity money.

• B. Legal money.

• C. Token money

• D. Representative money

What is NOT a function of money?

• A. Store of value.

• B. Medium of exchange.

• C. Inflation regulator.

• D. Standard of deferred payment.

Which of the following is part of the money supply?

• A. Treasury bonds.

• B. Demand deposits.

• C. Gold reserves.

• D. Mortgage securities.

Who acts as the lender of last resort?

• A. Commercial banks.

• B. Central bank.

• C. Credit unions.

• D. Savings institutions.

Which deposit can be withdrawn at any time without notice?

• A. Fixed deposit.

• B. Time deposit.

• C. Demand deposit.

• D. Savings deposit.

Open market operations refer to:

• A. Adjusting interest rates.

• B. Buying and selling government securities.

• C. Setting reserve requirements.

• D. Regulating foreign exchange rates.

Which of the following is TRUE about the reserve requirement?

• A. It determines how much gold banks must hold.

• B. It is set by commercial banks.

• C. It influences the amount banks can lend.

• D. It regulates the currency exchange rate.