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Money, Banking, & Finance

Total questions: 50

Worksheet time: 48mins

Name
Class
Date
1.
What do you call anything that people will accept as payment for goods and services?
a)
bonds
b)
money
c)
savings
d)
stocks
2.
Which physical property of money allows sellers to make change?
a)
divisibility
b)
durability
c)
portability
d)
uniformity
3.
Which physical property of money explains why representative money replaced commodity money such as gold and silver?
a)
divisibility
b)
durability
c)
portability
d)
uniformity
4.
Which economic property of money refers to its use as a medium of exchange?
a)
acceptability
b)
portability
c)
scarcity
d)
stability
5.
Which function of money makes it easier for people to save their money to spend in the future?
a)
medium of exchange
b)
standard of value
c)
store of value
d)
uniformity of currency
6.
Which function of money allows you to decide if you want to buy two $10 movie tickets or a $20 DVD?
a)
medium of exchange
b)
standard of value
c)
store of value
d)
uniformity of currency
7.
Which of the following is NOT part of M1?
a)
checking account deposits
b)
coins
c)
paper money
d)
savings account deposits
8.
Which statement best describes the original purpose of savings and loan associations?
a)
to allow the government to deposit tax receipts
b)
to allow savers to borrow money for homes
c)
to make loans to businesses
d)
to provide investment advice
9.
Which of the following makes credit unions different from other banks?
a)
automobile loans
b)
checking accounts
c)
home mortgages
d)
membership requirements
10.
Which of these products does NOT allow people a way to save money and earn interest?
a)
certificate of deposit
b)
home mortgage
c)
money market account
d)
savings account
11.
Which of the following allows banks to create money by making loans?
a)
bank mergers
b)
deregulation
c)
electronic banking
d)
fractional reserve banking
12.
Which of these cards provides an easy way for you to borrow money?
a)
ATM
b)
credit
c)
debit
d)
stored value
13.
An example of a nonbank financial intermediary is a
a)
commercial bank
b)
credit union
c)
insurance company
d)
savings and loan association
14.
A financial intermediary that pools funds from many investors to purchase a range of financial assets for them is a 
a)
finance company
b)
insurance company
c)
mutual fund
d)
pension fund
15.
Compound interest provides and additional incentive to save because
a)
interest rates are guaranteed to increase every year
b)
interest is applied to accumulated interest as well as the initial deposit
c)
the amount of interest doubles each year
d)
banks pay higher interest rates for longer term investments
16.
As a means to save for emergencies, money market accounts offer the benefit of
a)
increasing its value over time
b)
liquidity
c)
locking in funds for a period of time
d)
tax free earnings
17.
In order to get the highest possible return on their investments, investors take on the greater risk of investing in
a)
insured savings accounts
b)
certificates of deposit
c)
stocks and corporate bonds
d)
Treasury bills
18.
Investors who put all their money in investments with a guaranteed return still face the risk of
a)
corporations declaring bankruptcy
b)
economic factors affecting the value of stock
c)
losing purchasing power from inflation
d)
losing some of their principal
19.
A financial market where securities are bought and sold is a 
a)
savings bank
b)
finance company
c)
insurance company
d)
stock exchange
20.
Corporations offer investors a share of ownership in the corporation through
a)
savings bonds
b)
certificates of deposit
c)
money market mutual funds
d)
stock mutual funds
21.
Investors who purchase bonds because they want the guaranteed interest income will be most concerned with
a)
liquidity
b)
maturity
c)
par value
d)
yield
22.
The type of bond that carries the highest risk and the highest yield is a
a)
junk bond
b)
municipal bond
c)
savings bond
d)
Treasury bond
23.
Bond investors who want to sell their bonds before the maturity date in order to make a profit would sell when the
a)
bond rating has declined
b)
coupon rate his risen
c)
par value has fallen
d)
yield has fallen
24.
Money function as:
a)
A store of value
b)
a unit of account
c)
a medium of exchange
d)
all of these
25.
If you are estimating your total expenses for school next semester, you are using money primarily as:
a)
a medium of exchange
b)
a store of value
c)
a unit of account
d)
an economic investment
26.
If you write a check on a bank to purchase a used Honda Civic, you are using money as:
a)
A medium of exchange
b)
a store of value
c)
a unit of account
d)
an economic investment
27.
The paper money used in the United States is:
a)
National Bank Notes
b)
Treasury Notes
c)
United States Notes
d)
Federal Reserve Notes
28.
In the United States, the money supply (M1) is comprised of: 
a)
coins, paper currency, and checkable deposits
b)
. currency, checkable deposits, and Series E bonds
c)
coins, paper currency, checkable deposits, and credit balances with brokers
d)
paper currency, coins, gold certificates, and time deposits
29.
Checkable deposits are classified as money because
a)
They can be readily used in purchasing goods and paying debts
b)
banks hold currency equal to the value of their checkable deposits
c)
they are ultimately the obligations of the Treasury
d)
they earn interest income for the depositor
30.
Currency in circulation is part of: 
a)
 M1 only.
b)
M2 not including M1
c)
neither M1 nor M2
d)
both M1 and M2
31.
Money market deposit accounts are included in: 
a)
M1 only
b)
M2 only
c)
neither M1 nor M2
d)
both M1 and M2
32.
In the U.S. economy the money supply is controlled by the: 
a)
U.S. Treasury
b)
. Federal Reserve System
c)
Senate Committee on Banking and Finance
d)
. Congress
33.
In defining money as M1, economists exclude time deposits because: 
a)
the intrinsic value of time deposits is nil
b)
the purchasing power of time deposits is much less stable than that of checkable deposits and currency
c)
they are not directly or immediately a medium of exchange
d)
. they are not recognized by the Federal government as legal tender
34.

Beginning in 2008, why did the Federal Reserve choose to follow the policy shown by this graph?

a)

to reduce the impact of the financial crisis

b)

to help banks make loans to home buyers

c)

to help banks make loans to new businesses

d)

to reduce the impact of high unemployment

35.

Why is using money as a medium of exchange preferable to bartering?

a)

the relative value of bartered goods remains the same over time.

b)

the value of money fluctuates over time.

c)

the relative value of goods is difficult to establish in a barter system.

d)

the value of bartered goods decreases after they are purchased.

36.

Why is it important to protect members of the Federal Reserve Board of Governors fro political pressures?

a)

Political pressures could lead to one district being over-represented.

b)

Political pressures could lead to reappointment.

c)

Political pressures always favor the wealthy.

d)

Political pressures could cause them to make poor decision.

37.

What would be the main reason for a difference in interest rates for savings accounts versus certificates of deposit (CDs)?

a)

Saving account rates are higher because consumers must keep a higher balance int eh account.

b)

Savings account rates are higher because consumers cannot write any checks on those accounts.

c)

CD rates are higher because consumers cannot remove their money until the end of a certain time period.

d)

CD rates are higher because consumers must keep a higher balance in the account.

38.

Taking a picture of your graduation check from grandma in order to deposit into your savings account, illustrates what financial trend?

a)

decreased use of credit cards

b)

decreased use of cash

c)

decreased use of debit cards

d)

increased use of mobile banking

39.

"How many millionaires do you know who have become wealthy by investing in savings accounts? I rest my case." by Robert G. Allen, financial writer.

What principle of investing does this quote reflect?

a)

Higher risk usually offers higher potential return.

b)

Higher risk usually offers lower potential return.

c)

Greater liquidity usually offers higher potential return.

d)

Greater liquidity usually offers lower potential return.

40.

What is the function of a municipal bond?

a)

to provide money for a firm to expand its business

b)

to provide money for the federal government to pay its degts

c)

to provide money for local government to finance public projects

d)

to provide money for individuals who are willing to take high risks

41.

capital gain

a)

the difference between the selling price and purchase price that results in a large financial gain for the seller

b)

the difference between the selling price and purchase price that is a huge financial loss for the seller

c)

a market in which money is lent for periods of one or more years

42.

interest

a)

price paid for the use of borrowed money

b)

the amount of money borrowed

c)

the act of redirecting resources from being consumed today

43.

principal

a)

the ability to be used as , or directly converted into cash

b)

the price paid for the use of borrowing money

c)

amount of money borrowed

44.

Without money people would be forced to barter, or trade goods or services directly for other goods or services.

a)

True

b)

False

45.

A _______________________ is anything that is generally accepted as a measure of value and wealth.

a)

medium of exchange

b)

standard of value

c)

store of value

d)

financial institution

46.

For money to carry out its functions, it must be:

a)

stable

b)

scarce and hard to counterfeit

c)

accepted and durable

d)

divisible and portable

e)

All of the above

47.

Electronic funds transfer (EFT) allows money to be transferred from one bank account to another.

a)

True

b)

False

48.

The 3 main types of banks in the United States are:

a)

Commercial banks

b)

Savings and loan associations

c)

Credit unions

d)

All of these

49.
A share of a company's net profits paid to stockholders is called-
a)
Interest
b)
Dividend
c)
Capital gains
d)
Inflation
50.
Money earned on an investment or sale-
a)
Deposit
b)
Dividend
c)
Interest
d)
Profits

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