Money, Debt And Deficit Quiz
A short online quiz on the forms and uses of money, and the 2012 debt and deficit issues.
Questions and Answers
- 1.
Money replaced this ancient system of trade.
- A.
Hunting
- B.
Marketplaces
- C.
Barter
- D.
Medium of exchange
Correct Answer
C. BarterExplanation
Barter is the correct answer because it refers to the direct exchange of goods and services without the use of money. In ancient times, people used to trade goods and services directly with each other, which was known as barter. However, as societies evolved and became more complex, the use of money emerged as a more efficient medium of exchange, replacing the ancient system of trade.Rate this question:
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- 2.
When specific goods or products, such as shells, cigarettes or precious metals, are used by people to make trading easier and allow trade to take place, we call these products...
- A.
Tradables
- B.
Commodity Money
- C.
Coins
- D.
Swap goods
Correct Answer
B. Commodity MoneyExplanation
Commodity money refers to specific goods or products, such as shells, cigarettes, or precious metals, that are used as a medium of exchange in trade. These goods have intrinsic value and are widely accepted in transactions. Unlike other forms of money, such as coins or paper currency, commodity money holds value in and of itself, rather than being representative of value. Therefore, the correct answer for this question is Commodity Money.Rate this question:
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- 3.
When money makes trade easier as a sort of "go-between", we call this use of money
- A.
Medium of Exchange
- B.
Measure of Value
- C.
Store of Value
- D.
Unit of Account
Correct Answer
A. Medium of ExchangeExplanation
Money serves as a medium of exchange when it is used as a common medium to facilitate the exchange of goods and services. It allows individuals to trade their goods and services for money, which can then be used to purchase other goods and services. This use of money as a medium of exchange helps to simplify and streamline the process of trade, making it more efficient and convenient for all parties involved.Rate this question:
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- 4.
What form of money dominates our money supply today?
- A.
Coins
- B.
Currency
- C.
Paper Checks
- D.
Demand Deposit accounts
Correct Answer
D. Demand Deposit accountsExplanation
Demand deposit accounts dominate our money supply today because they are the most commonly used form of money. Demand deposit accounts, also known as checking accounts, allow individuals and businesses to deposit and withdraw funds easily. With the widespread use of electronic banking, most transactions are now conducted through demand deposit accounts rather than physical forms of money like coins or currency. Paper checks are also becoming less common as electronic transfers and online payments become more popular. Therefore, demand deposit accounts have become the primary form of money in our modern economy.Rate this question:
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- 5.
What "backs" United States money today?
- A.
Gold
- B.
Nothing
- C.
Bonds
- D.
Faith and credit of the U.S. Government
Correct Answer
D. Faith and credit of the U.S. GovernmentExplanation
The correct answer is "Faith and credit of the U.S. Government." This means that the value of United States money is supported by the trust and confidence that people have in the U.S. Government to honor its financial obligations. It is not backed by gold, as it used to be in the past. Instead, the U.S. Government relies on its ability to repay its debts and maintain a stable economy to give value to its currency.Rate this question:
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- 6.
"Plastic" is a form of money.
- A.
True
- B.
False
Correct Answer
B. FalseExplanation
The statement "Plastic is a form of money" is false. Plastic is not a form of money, but rather a material that is commonly used to make credit and debit cards, which can be used as a means of payment. Money refers to a medium of exchange that is generally accepted in transactions for goods and services.Rate this question:
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- 7.
American paper currency today is
- A.
Redeemable in gold or silver.
- B.
Backed by gold and silver.
- C.
Mostly made in and owned by China.
- D.
Managed by the Federal Reserve System.
Correct Answer
D. Managed by the Federal Reserve System.Explanation
The correct answer is managed by the Federal Reserve System. The Federal Reserve System, also known as the Fed, is responsible for managing the monetary policy of the United States. This includes the issuance and regulation of paper currency. The Fed determines the amount of money in circulation, sets interest rates, and maintains the stability of the financial system. While American paper currency used to be backed by gold and silver in the past, today it is fiat money, meaning its value is not directly linked to any physical commodity.Rate this question:
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- 8.
If our government eliminated cash and currency and made all transactions done on computers, we could expect
- A.
Faster and better economic growth.
- B.
An alternative commodity money to spring up.
- C.
Other countries to dominate our economy.
- D.
People to rebel.
Correct Answer
B. An alternative commodity money to spring up.Explanation
If the government eliminates cash and currency and makes all transactions done on computers, it would create a void in the market for a medium of exchange. In such a scenario, it is likely that an alternative commodity money would emerge to fill this gap. This could be in the form of a digital currency or even a physical commodity like gold or silver. People would seek out these alternatives to ensure they have a reliable and tangible means of conducting transactions.Rate this question:
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- 9.
The yearly overspending by a government is called...
- A.
The Deficit.
- B.
The National Debt.
- C.
The Budget
- D.
The Fiscal Cliff.
Correct Answer
A. The Deficit.Explanation
The correct answer is "The Deficit." The yearly overspending by a government refers to the deficit, which occurs when a government spends more money than it collects in revenue. This can lead to an accumulation of national debt over time if the deficit is not addressed. The budget refers to the financial plan that outlines the government's anticipated revenue and expenses for a specific period. The fiscal cliff is a term used to describe a combination of spending cuts and tax increases that could potentially lead to a recession if not resolved.Rate this question:
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- 10.
If a country overspends its budget year after year, we call the result
- A.
The deficit.
- B.
The national debt.
- C.
The budget.
- D.
The fiscal cliff.
Correct Answer
B. The national debt.Explanation
When a country consistently spends more money than it earns, resulting in a shortfall, it accumulates a national debt. This debt represents the total amount of money owed by the government to its creditors, which can include other countries, financial institutions, and individuals. The national debt is a long-term consequence of continuous budget deficits and can have significant economic implications for a country, such as higher interest payments, reduced borrowing capacity, and potential inflationary pressures.Rate this question:
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- 11.
The United States today has a national debt of approximately
- A.
$16 Billion.
- B.
$200 Billion
- C.
$16 Trillion
- D.
$1 Gazillion
Correct Answer
C. $16 TrillionExplanation
The correct answer is $16 Trillion. The national debt refers to the total amount of money that a country owes to its creditors. In the case of the United States, its national debt is currently around $16 trillion. This debt has accumulated over time due to government spending exceeding revenue. It is important for the government to manage and reduce the national debt to ensure the country's financial stability and avoid potential economic issues in the future.Rate this question:
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- 12.
The U.S. Government today is facing a problem called "Fiscal Cliff". This means...
- A.
We will fall over into a Depression unless Obama is re-elected.
- B.
Congress and the President must agree on tax cuts and/or spending cuts or there will be automatic penalties that could bring a recession.
- C.
Congress and the President must raise taxes on the rich or else the poor will fall off the cliff.
- D.
Spending must be cut for all people or we will go over a cliff.
Correct Answer
B. Congress and the President must agree on tax cuts and/or spending cuts or there will be automatic penalties that could bring a recession.Explanation
The correct answer is that Congress and the President must agree on tax cuts and/or spending cuts or there will be automatic penalties that could bring a recession. This is because the term "Fiscal Cliff" refers to a situation where a series of tax increases and spending cuts are scheduled to take effect at the same time, which could potentially lead to a recession if not addressed. The answer accurately reflects the need for agreement between Congress and the President to prevent these automatic penalties and mitigate the risk of a recession.Rate this question:
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- 13.
Most government spending goes "out the door" today ...
- A.
With a specific act of Congress.
- B.
By order of President Obama.
- C.
Automatically, with no action by Congress.
- D.
Directly to China.
Correct Answer
C. Automatically, with no action by Congress.Explanation
Government spending goes "out the door" automatically, with no action by Congress. This means that once a budget has been approved by Congress, the government agencies and departments can spend the allocated funds without needing further approval or authorization from Congress for each individual expenditure. This process allows for a more efficient and streamlined use of government funds.Rate this question:
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- 14.
If a person receives money or benefits from the government because he/she qualifies by reason of some action or payment, we call this a(n)...
- A.
Entitlement.
- B.
Budget item.
- C.
Deficit.
- D.
Debt.
Correct Answer
A. Entitlement.Explanation
When a person qualifies for money or benefits from the government due to their actions or payments, it is referred to as an entitlement. This means that they have met the necessary criteria and are entitled to receive these funds or benefits. The term "entitlement" implies that the person has a right to receive these resources based on their eligibility, rather than it being a discretionary decision by the government.Rate this question:
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Our quizzes are rigorously reviewed, monitored and continuously updated by our expert board to maintain accuracy, relevance, and timeliness.
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Current Version
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Mar 21, 2023Quiz Edited by
ProProfs Editorial Team -
Nov 15, 2012Quiz Created by
NorrisJ
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