Money and Banking System Quiz
Explore monetary economics with questions on money functions, central banks, monetary policy, and more. Test your understanding now!
#1
Which of the following is NOT a function of money in an economy?
Medium of exchange
Store of value
Unit of labor
Measure of value
#2
What does GDP stand for?
General Domestic Product
Gross Domestic Product
Gross Development Product
General Developmental Program
#3
Which of the following is NOT a component of the fractional reserve banking system?
Reserve Requirements
Discount Rate
Open Market Operations
Interest Rate
#4
What is the main function of the Federal Reserve System in the United States?
To regulate the stock market
To control inflation rates
To oversee commercial banks
To manage monetary policy
#5
What is the term for the interest rate at which the Federal Reserve lends to commercial banks?
Prime rate
Federal funds rate
Discount rate
Treasury rate
#6
What is the primary function of a central bank?
Issuing currency
Regulating interest rates
Overseeing commercial banks
All of the above
#7
What is the name of the process through which banks create money when they lend out deposits?
Fractional reserve banking
Money creation
Deposit multiplication
Open market operations
#8
Which of the following is NOT a characteristic of fiat money?
Intrinsically valuable
Government-issued
No intrinsic value
Legal tender
#9
Which of the following is a characteristic of commodity money?
It has no intrinsic value
It is not easily divisible
It is government-issued
It has intrinsic value
#10
What is the term for the total amount of money in circulation in an economy at a specific time?
M1 money supply
M2 money supply
M3 money supply
Monetary base
#11
What is the term for a situation where the inflation rate is higher than the nominal interest rate?
Hyperinflation
Deflation
Stagflation
Disinflation
#12
Which of the following is a characteristic of fiat money?
Backed by a physical commodity
Has intrinsic value
Cannot be used for legal transactions
Value determined by government decree
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