Functions of Money Quiz

What is the primary function of money?

• To create wealth

• To control inflation

• To act as a medium of exchange

• To increase production

Which of the following is NOT a function of money?

• Store of value

• Measure of productivity

• Medium of exchange

• Unit of account

What does "store of value" mean in relation to money?

• Money can be used to measure happiness

• Money can be exchanged for goods

• Money retains its value over time for future use

• Money increases in value over time

Which of the following is an example of commodity money?

• Gold

• Paper currency

• Debit card

• Bitcoin

Which function of money helps in comparing the value of goods and services?

• Store of value

• Medium of exchange

• Standard of deferred payment

• Unit of account

Which of the following best describes digital money?

• Physical currency

• Barter trade

• Money stored electronically

• Gold-backed notes

What does the Fisher Effect describe?

• Relationship between savings and interest rates

• Relationship between inflation and unemployment

• Relationship between nominal interest rate and inflation rate

• Relationship between GDP and money supply

Which of the following is most likely to happen during periods of high inflation?

• Purchasing power increases

• Interest rates decrease

• Real value of money decreases

• Demand for cash rises

Which of the following is a key factor that influences interest rates in an economy?

• Literacy rate

• Inflation rate

• Population growth

• Climate change

What happens to interest rates when central banks adopt a contractionary monetary policy?

• Interest rates decrease

• Interest rates remain unchanged

• Interest rates increase

• Interest rates become negative