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Money

Total questions: 29

Worksheet time: 11mins

Name
Class
Date
1.

What are the characteristics of money?

a)

Longevity, weight, non-divisibility, inconsistency, abundant supply, and rejection

b)

Durability, portability, divisibility, uniformity, limited supply, and acceptability

c)

Fragility, immobility, indivisibility, diversity, unlimited supply, and unacceptability

2.

What are monetary aggregates?

a)

One form of international payment

b)

A type of investment in the stock market

c)

An indicator of bank interest rate

d)

Indicators of the amount of money in circulation in an economy

3.

What is the importance of digital currencies?

a)

They are obsolete and insecure

b)

They only benefit large financial companies

c)

They have no utility in the current economy

d)

They offer greater security, speed, and accessibility in financial transactions.

4.

What is liquidity in financial terms?

a)

Total value of a company's assets

b)

Ease of obtaining a bank loan

c)

Ability to convert an asset into cash without losing value.

d)

Amount of debt a company has

5.

What are the types of liquidity?

a)

Cold liquidity, hot liquidity, warm liquidity

b)

Passive liquidity, active liquidity, neutral liquidity

c)

Current liquidity, dry liquidity, absolute liquidity

d)

Hard liquidity, soft liquidity, intermediate liquidity

6.

What is the difference between fiduciary money and commodity money?

a)

Fiat money has no physical backing, while commodity money is backed by a tangible asset.

b)

Fiat money is used in developing economies, while commodity money is used in developed economies

c)

Fiat money is backed by gold, while commodity money has no physical backing

d)

Fiat money is more stable in value than commodity money

7.

How is the liquidity of a financial asset measured?

a)

Liquidity ratio

b)

Net present value

c)

Rate of return

d)

Solvency index

8.

What is the role of money in the economy?

a)

The role of money in the economy is to finance charity projects

b)

The role of money in the economy is to determine the value of people

c)

The role of money in the economy is to control the weather

d)

The role of money in the economy is to serve as a medium of exchange, unit of account, store of value, and standard of deferred payment.

9.

What is the relationship between the money supply and inflation?

a)

The money supply has no relationship with inflation.

b)

An increase in the money supply always leads to a decrease in inflation.

c)

An increase in the money supply can lead to an increase in inflation.

d)

A decrease in the money supply can lead to an increase in inflation.

10.
The payments system is
a)
The method of conducting transactions in the economy
b)
Used by union officials to set salary caps
c)
An illegal method of rewarding contracts
d)
Used by your employer to determine salary increases
11.
As the payments system evolves from barter to a monetary system,
a)
Commodity money is likely to precede the use of paper currency
b)
Transaction costs increase
c)
The number of prices that need to be calculated increase rather dramatically
d)
Specialization decreases
12.
A disadvantage of ________ is that it is very heavy and hard to transport from one place toanother.
a)
Commodity money
b)
Fiat money
c)
Electronic money
d)
Paper money
13.
Paper currency that has been declared legal tender but is not convertible into coins or preciousmetals is called ________ money.
a)
Commodity
b)
Fiat
c)
Electronic
d)
Funny
14.
The payments system is
a)
The method of conducting transactions in the economy
b)
Used by union officials to set salary caps
c)
An illegal method of rewarding contracts
d)
Used by your employer to determine salary increases
15.
As the payments system evolves from barter to a monetary system,
a)
Commodity money is likely to precede the use of paper currency
b)
Transaction costs increase
c)
The number of prices that need to be calculated increase rather dramatically
d)
Specialization decreases
16.
A disadvantage of ________ is that it is very heavy and hard to transport from one place toanother.
a)
Commodity money
b)
Fiat money
c)
Electronic money
d)
Paper money
17.
Paper currency that has been declared legal tender but is not convertible into coins or preciousmetals is called ________ money.
a)
Commodity
b)
Fiat
c)
Electronic
d)
Funny
18.
When paper currency is decreed by governments as legal tender, legally it must be ________.
a)
Paper currency backed by gold
b)
A precious metal such as gold or silver
c)
Accepted as payment for debts
d)
Convertible into an electronic payment
19.
The evolution of the payments system from barter to precious metals, then to fiat money, then tochecks can best be understood as a consequence of the fact that
a)
Paper is more costly to produce than precious metals
b)
Precious metals were not generally acceptable
c)
Precious metals were difficult to carry and transport
d)
Paper money is less accepted than checks
20.
Compared to checks, paper currency and coins have the major drawbacks that they
a)
Are easily stolen
b)
Are hard to counterfeit
c)
Are not the most liquid assets
d)
Must be backed by gold
21.
Introduction of checks into the payments system reduced the costs of exchanging goods andservices. Another advantage of checks is that
a)
They provide convenient receipts for purchases
b)
They can never be stolen
c)
They are more widely accepted than currency
d)
The funds from a deposited check are available for use immediately
22.
The evolution of the payments system from barter to precious metals, then to fiat money, then tochecks can best be understood as a consequence of
a)
Government regulations designed to improve the efficiency of the payments system
b)
Government regulations designed to promote the safety of the payments system
c)
Innovations that reduced the costs of exchanging goods and services
d)
Competition among firms to make it easier for customers to purchase their products
23.
Compared to an electronic payments system, a payments system based on checks has the majordrawback that
a)
Checks are less costly to process
b)
Checks take longer to process, meaning that it may take several days before the depositor
c)
Fraud may be more difficult to commit when paper receipts are eliminated
d)
Legal liability is more clearly defined
24.
Which of the following sequences accurately describes the evolution of the payments system?
a)
Barter, coins made of precious metals, paper currency, checks, electronic funds transfers
b)
Barter, coins made of precious metals, checks, paper currency, electronic funds transfers
c)
Barter, checks, paper currency, coins made of precious metals, electronic funds transfers
d)
Barter, checks, paper currency, electronic funds transfers
25.
During the past two decades an important characteristic of the modern payments system hasbeen the rapidly increasing use of
a)
Checks and decreasing use of currency
b)
Electronic fund transfers
c)
Commodity monies
d)
Fiat money
26.
Which of the following is not a form of e-money?
a)
A debit card
b)
A credit card
c)
A stored-value card
d)
A smart card
27.
A smart card is the equivalent of
a)
Cash
b)
Savings bonds
c)
Savings deposits
d)
Certificates of deposit
28.
An electronic payments system has not completely replaced the paper payments system becauseof all of the following reasons except
a)
Expensive equipment is necessary to set up the system
b)
Security concerns
c)
Privacy concerns
d)
Transportation costs
29.
In explaining the evolution of money
a)
Government regulation is the most important factor
b)
Commodity money, because it is valued more highly, tends to drive out paper money
c)
New forms of money evolve to lower transaction costs
d)
Paper money is always backed by gold and therefore more desirable than checks

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