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Money and Its Functions Quiz

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Which of the following is not a function of money?

Unit of labor

Explanation

Not recognized as a traditional function of money.

Who issues currency in most countries?

Central bank

Explanation

Responsible authority for issuing currency.

What term describes the situation where there is a sustained increase in the general price level of goods and services?

Inflation

Explanation

Persistent rise in price levels.

Which of the following is NOT a characteristic of fiat money?

Backed by a commodity

Explanation

Not tied to any physical asset.

Which of the following is NOT a characteristic of a good currency?

Subjectivity

Explanation

Objective measure of value.

Which economist proposed the concept of 'fiat money'?

John Maynard Keynes

Explanation

Key figure in advocating for fiat currency.

What is the primary function of money as a 'store of value'?

To preserve purchasing power

Explanation

Preserving worth over time.

What is the term used to describe the risk associated with changes in the value of investments due to market fluctuations?

Market risk

Explanation

Potential loss due to market shifts.

Which of the following is NOT considered a form of money?

Stocks

Explanation

Not universally accepted as a medium of exchange.

#10

What is the term for the study of the production, distribution, and consumption of goods and services?

Economics

Explanation

Study of resource allocation.

#11

What term is used to describe the increase in the general price level of goods and services over time?

Inflation

Explanation

Rise in the cost of living.

#12

What economic theory argues that the quantity of money in an economy is the primary determinant of the level of economic activity and inflation?

Monetarism

Explanation

Emphasizes money supply's impact on economy.

#13

What is the term for the interest rate at which the Federal Reserve lends funds overnight to banks?

Federal funds rate

Explanation

Key rate for interbank lending.

#14

Which of the following statements about fractional reserve banking is FALSE?

It reduces the risk of bank runs.

Explanation

Fractional reserve banking can amplify bank run risks.

#15

Who coined the term 'invisible hand' to describe the self-regulating nature of markets?

Adam Smith

Explanation

Metaphor for market forces.

Money and Its Functions Quiz

Which of the following is not a function of money?

Who issues currency in most countries?

What term describes the situation where there is a sustained increase in the general price level of goods and services?

Which of the following is NOT a characteristic of fiat money?

Which of the following is NOT a characteristic of a good currency?

Which economist proposed the concept of 'fiat money'?

What is the primary function of money as a 'store of value'?

What is the term used to describe the risk associated with changes in the value of investments due to market fluctuations?

Which of the following is NOT considered a form of money?

What is the term for the study of the production, distribution, and consumption of goods and services?

What term is used to describe the increase in the general price level of goods and services over time?

What economic theory argues that the quantity of money in an economy is the primary determinant of the level of economic activity and inflation?

What is the term for the interest rate at which the Federal Reserve lends funds overnight to banks?

Which of the following statements about fractional reserve banking is FALSE?

Who coined the term 'invisible hand' to describe the self-regulating nature of markets?

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