Understanding the Concept of Money and its Significance Quiz

Explore monetary economics with these quiz questions covering functions of money, inflation, central banking, and more.

#1

Which of the following is not a function of money?

Medium of exchange
Unit of account
Store of value
Source of electricity
#2

In the context of money, what does the term 'M1' represent?

Physical currency and coins
Checking account deposits
Savings account deposits
Government bonds
#3

Who issues currency notes in the United States?

Federal Reserve
Department of the Treasury
United States Mint
Congress
#4

What is the primary role of the Federal Reserve System in the United States?

Fiscal policy formulation
Currency printing
Monetary policy implementation
Tax collection
#5

In the context of banking, what does the term 'FDIC' stand for?

Federal Department of International Commerce
Financial Data and Information Center
Federal Deposit Insurance Corporation
Foreign Direct Investment Commission
#6

What term is used to describe the situation where there is an increase in the general price level of goods and services in an economy?

Recession
Inflation
Deflation
Stagflation
#7

Who is often referred to as the 'Father of Economics' and wrote 'The Wealth of Nations'?

John Maynard Keynes
Adam Smith
Karl Marx
Milton Friedman
#8

Which type of inflation is characterized by a sustained and rapid increase in the general price level?

Hyperinflation
Cost-push inflation
Demand-pull inflation
Stagflation
#9

What is the term for the interest rate at which banks lend to each other overnight?

Prime rate
Discount rate
Federal funds rate
LIBOR
#10

Which economic concept refers to the total market value of all goods and services produced within a country in a specific time period?

Gross National Product (GNP)
Net Domestic Product (NDP)
Gross Domestic Product (GDP)
Net National Product (NNP)
#11

What is the term for the rate at which the general level of prices for goods and services is rising, leading to a decrease in purchasing power?

Deflation
Stagflation
Inflation
Recession
#12

Which monetary policy tool involves the central bank buying financial assets to increase the money supply and lower interest rates?

Quantitative easing
Fiscal policy
Open market operations
Currency peg
#13

What is the term for the total value of all final goods and services produced in an economy over a specific period?

Gross National Product (GNP)
Gross Domestic Product (GDP)
Net National Product (NNP)
National Income
#14

In the context of money, what does the term 'fiat money' mean?

Money backed by a commodity (e.g., gold)
Money with no intrinsic value, but accepted as a medium of exchange by government decree
Digital currency
Foreign currency
#15

Which economist is associated with the theory of supply-side economics and advocated for tax cuts to stimulate economic growth?

John Maynard Keynes
Milton Friedman
Adam Smith
Arthur Laffer
#16

Which type of money is backed by a physical commodity, such as gold or silver?

Fiat money
Cryptocurrency
Commodity money
Digital money
#17

What is the term for the portion of a bank's deposits that it must hold in reserve and cannot lend out?

Excess reserves
Required reserves
Fractional reserves
Liquid reserves

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