#1
Which of the following is NOT a function of money in an economy?
Unit of labor
ExplanationNot a recognized function of money in an economy.
#2
What is the primary tool used by central banks to influence the money supply?
Interest rates
ExplanationPrimary instrument for central banks to control money supply.
#3
Which of the following is NOT a characteristic of fiat money?
Backed by a commodity like gold
ExplanationFiat money is not backed by commodities like gold.
#4
What is the term for the interest rate at which banks lend money to each other overnight?
Federal funds rate
ExplanationOvernight lending rate between banks.
#5
Which of the following is NOT a function of a central bank?
Setting fiscal policy
ExplanationNot within the typical functions of a central bank.
#6
Which of the following is NOT a function of commercial banks?
Issuing currency
ExplanationCommercial banks do not have the authority to issue currency.
#7
What is the term for the interest rate at which the central bank lends money to commercial banks?
Discount rate
ExplanationInterest rate for central bank loans to commercial banks.
#8
What does the term 'fractional reserve banking' refer to?
A system where banks only keep a fraction of deposits on hand and lend out the rest
ExplanationBanking system where only a fraction of deposits is kept and the rest is lent.
#9
Which entity typically issues currency in a modern economy?
Central bank
ExplanationCentral authority responsible for issuing currency.
#10
What is the main function of the Federal Deposit Insurance Corporation (FDIC) in the United States?
To insure bank deposits
ExplanationMain role is to insure bank deposits.
#11
What does the term 'monetary policy' refer to?
Policy aimed at controlling the money supply and interest rates
ExplanationPolicy to manage money supply and interest rates.
#12
What does the term 'seigniorage' refer to in the context of money and banking?
The difference between the face value of money and its production cost
ExplanationProfit made from the production of currency.
#13
What is the term for the difference between a bank's assets and liabilities?
Net worth or equity
ExplanationThe difference between a bank's assets and liabilities.
#14
What is the name for the process of converting financial assets into a liquid form without losing their value?
Liquidity transformation
ExplanationProcess of maintaining asset liquidity without value loss.
#15
What is the primary purpose of the Basel Accords?
To set standards for bank capital adequacy
ExplanationEstablishing standards for bank capital sufficiency.
#16
Which of the following is NOT a component of the M1 money supply?
Savings accounts
ExplanationSavings accounts are not part of M1 money supply.
#17
What is the term for the rate at which the general level of prices for goods and services is rising?
Inflation
ExplanationRate of increase in general price levels.