Chapter 1. Money And Banking

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| By Heodainhan277
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Heodainhan277
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Chapter 1. Money And Banking - Quiz


Questions and Answers
  • 1. 

    Define money?

  • 2. 

     What are the primary functions of money?

  • 3. 

    How many types of money are there? What are they?

  • 4. 

    What is money supply?

  • 5. 

    What is transaction balances?

  • 6. 

    What is liquidity?

  • 7. 

    What are M0, M1, M2 and M3?

  • 8. 

    How many kinds of money supply in common? Namely.

  • 9. 

    What are the differences between checks and traveller’s checks?

  • 10. 

    Which is the most liquid measure of money supply? And why?

  • 11. 

    Which is the least liquid measure of money supply? And why?

  • 12. 

    What is Debit card?

  • 13. 

    What is Credit card?

  • 14. 

    What are differences between debit card and credit card?

  • 15. 

    If you are shopping online, is it better to pay by credit card or debit card?

  • 16. 

    What are three main functions of banking system?

  • 17. 

    Which of the following is not one of the basic functions of money?

    • A.

      A. A means of calculating real value

    • B.

      B.  A store of value

    • C.

      C. A standard of deferred payments

    • D.

      D. A method of saving

    Correct Answer
    A. A. A means of calculating real value
    Explanation
    The basic functions of money include being a store of value, a standard of deferred payments, and a method of saving. However, money itself is not a means of calculating real value. The value of goods and services is determined by various factors such as supply and demand, production costs, and market conditions. Money is simply used as a medium of exchange to facilitate transactions and represent the value of goods and services.

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  • 18. 

    Which of the following is the best example of how money is used as a medium of exchange?

    • A.

      A. Exchange rates

    • B.

      B. Interest rates

    • C.

      C. Real prices

    • D.

      D. Nominal prices

    Correct Answer
    D. D. Nominal prices
    Explanation
    Nominal prices refer to the prices of goods and services in terms of money. Money acts as a medium of exchange when it is used to facilitate transactions by enabling the exchange of goods and services for a certain amount of money. Nominal prices directly involve the use of money as a medium of exchange, making it the best example among the given options. Exchange rates, interest rates, and real prices are not directly related to the use of money as a medium of exchange.

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  • 19. 

    Which of the following is the best example of how money is used as a store of value?

    • A.

      A.The real value of currency remains constant over time  

    • B.

      B.The nominal value of currency remains constant over time  

    • C.

       C. The real value of currency changes predictably over time  

    • D.

       D. The nominal value of currency changes predictably over time

    Correct Answer
    B. B.The nominal value of currency remains constant over time  
  • 20. 

    Which is an example of commodity money?

    • A.

      A. A $20 note

    • B.

      B. A cheque

    • C.

      C. Gold  

    • D.

      D. A VND20.000 note

    Correct Answer
    C. C. Gold  
    Explanation
    Gold is considered an example of commodity money because it has intrinsic value. It is a physical item that holds value and can be used as a medium of exchange. Unlike paper money or cheques, which derive their value from the trust and confidence placed in the issuing authority, gold has value in and of itself. It has been used as a form of currency throughout history and is still recognized as a valuable asset today. Therefore, gold is an example of commodity money.

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  • 21. 

    Which is the definition of token money?

    • A.

      A. A useful good that serves as a medium of exchange.

    • B.

      B. A means of payment whose value or purchasing power as money greatly exceeds its cost of production or value in uses other than as money.

    • C.

      C. The value of token money is about equal to the value of the material contained in it.

    • D.

      D. The gold coins are examples of token money.

    Correct Answer
    C. C. The value of token money is about equal to the value of the material contained in it.
    Explanation
    Token money refers to a form of currency that holds value primarily because it is made from a material that has intrinsic worth. In other words, the value of token money is roughly equivalent to the value of the material it is made from, such as metal or paper. This distinguishes it from other forms of money, where the value may be based on factors such as government backing or the trust and confidence of users. The correct answer, option C, accurately describes this characteristic of token money.

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  • 22. 

    What is money of redemption?

    • A.

      A. The standard money used in the monetary system.

    • B.

      B. Any medium of exchange that is widely accepted in payment for goods and services.

    • C.

      C. The basic money of a country, into which other forms of money may be converted and which determines the value of other kinds of money.  

    • D.

      D. None is correct.

    Correct Answer
    A. A. The standard money used in the monetary system.
    Explanation
    Money of redemption refers to the standard money used in the monetary system. It is the basic money of a country, into which other forms of money may be converted and which determines the value of other kinds of money. It is the currency that is widely accepted in payment for goods and services.

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  • 23. 

    Modern monetary standards have been either ________ (1) standards, in which either ________(2) or ________(3) has been chiefly used as ________(4) money, or ________(5) standards, consisting of ________(6) currency paper units.

    Correct Answer
    commodity
    gold
    silver
    standard
    fiat
    inconvertible
    Explanation
    Modern monetary standards have been either commodity standards, in which either gold or silver has been chiefly used as commodity money, or fiat standards, consisting of inconvertible currency paper units.

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  • 24. 

    Which one of the following people is the endorser of a check?

    • A.

      A. The one who writes his or her name on the of the check

    • B.

      B. The one who originally wrote the check

    • C.

      C. The one who makes payment on the check

    • D.

      D. The one who printed the check

    Correct Answer
    C. C. The one who makes payment on the check
    Explanation
    The endorser of a check is the person who makes payment on the check. This means that they are the one who writes their name on the back of the check, indicating that they are transferring the payment to someone else. The person who originally wrote the check is the drawer, not the endorser. The person who printed the check is not relevant to the endorsement process.

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  • 25. 

    Why traveller’s checks considered as a form of money?

    • A.

      A. Anyone can buy them

    • B.

      B. They can widely accepted in payment for goods and services

    • C.

      C. They are easy to use

    • D.

      D. They can be replaced if stolen or lost.

    Correct Answer
    D. D. They can be replaced if stolen or lost.
    Explanation
    Traveller's checks are considered as a form of money because they can be replaced if stolen or lost. This feature provides a sense of security and convenience to the users as they can easily recover their funds in case of any unfortunate incident.

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  • 26. 

    How old do you have to be to get a credit card?

    • A.

      A. 16

    • B.

      B.17

    • C.

      C. 18

    • D.

      D. 19

    Correct Answer
    C. C. 18
    Explanation
    To get a credit card, you have to be at least 18 years old. This is because the legal age of adulthood in most countries is 18, and individuals are considered mature enough to handle financial responsibilities such as managing a credit card. At this age, individuals are also more likely to have a stable source of income, which is an important factor for credit card approval.

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  • 27. 

    Electronic funds transfer involved:

    • A.

         A. the transfer of funds from the Federal Reserve to member banks.  

    • B.

      B. the amount of demand deposits held at banks.

    • C.

         C. making and receiving payments via computers and other automated means.

    • D.

      D. payment procedure involving the use of the checks.

    Correct Answer
    C.    C. making and receiving payments via computers and other automated means.
    Explanation
    Electronic funds transfer refers to the process of making and receiving payments through electronic means, such as computers and other automated systems. This involves the transfer of funds electronically, without the need for physical checks or cash. The other options, such as the transfer of funds from the Federal Reserve to member banks or the amount of demand deposits held at banks, do not accurately describe electronic funds transfer. Therefore, the correct answer is C. making and receiving payments via computers and other automated means.

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  • 28. 

    Many employees receive their salaries directly into their accounts by _______.

    • A.

      A. BATS payment  

    • B.

      B. BACS payment  

    • C.

      C. BAPS payment

    • D.

      D. BABS payment

    Correct Answer
    B. B. BACS payment  
    Explanation
    Many employees receive their salaries directly into their accounts by BACS payment.

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  • 29. 

    Which of the following statements is correct?

    • A.

      A. Checking accounts have higher interest rates than savings accounts.  

    • B.

      B. Savings account is a type of bank account that is designed for everyday money transactions.  

    • C.

      C. Checking accounts are better for storing money and earning interest.

    • D.

      D. Checking accounts are typically used for regular spending and purchases, like paying bills, shopping for groceries, etc.

    Correct Answer
    D. D. Checking accounts are typically used for regular spending and purchases, like paying bills, shopping for groceries, etc.
  • 30. 

    BACS stands for Bankers Automated _________.

    • A.

      A.  clearing system  

    • B.

      B. storing system  

    • C.

      C. cost system

    • D.

      D. cheque system

    Correct Answer
    A. A.  clearing system  
    Explanation
    BACS stands for Bankers Automated Clearing System. This system is used by banks in the United Kingdom for processing electronic payments such as direct debits and direct credits. The BACS system allows for the efficient and secure transfer of funds between different bank accounts, making it a vital part of the banking infrastructure in the UK.

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  • Current Version
  • Mar 21, 2023
    Quiz Edited by
    ProProfs Editorial Team
  • Mar 08, 2020
    Quiz Created by
    Heodainhan277
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