16 Money and Banking Quiz

What is the main function of money that allows people to save?

• Medium of exchange

• Unit of account

• Standard of deferred payments

• Store of value

Which of the following is a characteristic that makes an item unsuitable to act as money?

• It is recognizable

• It is generally acceptable

• It is easy to carry

• It is perishable

What is one of the primary roles of a central bank?

• Controlling the money supply

• Deciding on the amount of government expenditure

• Issuing shares

• Raising taxes

What is the main aim of a commercial bank?

• To manage the national debt

• To make a profit

• To issue bank notes

• To act as banker to the government

Which function of money allows it to be used for future payments?

• Medium of exchange

• Store of value

• Unit of account

• Standard of deferred payments

What characteristic of money ensures it can be easily transported?

• Durable

• Divisible

• Portable

• Homogeneous

How do commercial banks primarily make their profit?

• By charging lower interest rates

• By charging higher interest rates on loans than they pay on deposits

• By accepting deposits only

• By providing free banking services

What is a common way for banks to lend money to customers?

• Overdrafts

• Investment accounts

• Current accounts

• Savings accounts

Which of the following is a function of commercial banks?

• Issuing currency

• Managing national debt

• Accepting deposits

• Controlling inflation

What does liquidity refer to in banking?

• The ability to accept deposits

• The ability to lend money

• The ability to turn an asset into cash quickly without loss

• The ability to earn high interest