Topic 3 - Money & Banking
Topic 3: Money & Banking - Multiple Choice Exercise
Choose the correct answer for each question in the quiz
When money works as a common denominator into which the values of all goods and services are expressed, it is which function of money?
- Medium of Exchange.
- Unit of Account.
- Store of Value
- Standard of Deferred Payment.
A difficulty of the barter system is:
- Lack of common measure of value.
- Lack of double coincidence of wants.
- Difficulty in storage of extra goods.
- All of the above.
Which of the following is a characteristic of money?
- It acts as a unit of account.
- It acts as a standard for deferred payment.
- It acts as a store of Value.
The narrow definition of money (M1) in the Irish economy is:
- Notes and coins issued by the Irish Central Bank.
- Money created by the commercial bank.
- Coins, notes and current accounts.
- Coins, notes and deposit accounts.
Which of the following statements is true?
- A barter system requires a double coincidence of wants.
- Holding cash is a good way of preserving the value of assets.
- Commercial banks must cover their deposits fully with cash reserves.
- A fall in reserve requirements forces banks to curtail credit.
Which one of the following is not a function of a Central Bank?
- Lender of last resort.
- Banker to the government.
- Banker to the general public.
- Both (a) & (b) are correct.
If a Central Bank wished to increase the supply of money it should
- Raise the reserve requirement.
- Raise the rate of discount.
- Buy government bonds in the money market.
- Do any or all of the above.
Which of the following is not a function of money
- A unit of account.
- A standard of deferred payment.
- A unit of exchange.
- A store of value.
Which of the following are instruments of Monetary Policy?
- Consumer Price Index.
- Interest Rates.
- Money Supply.
- Both (b) & (c) are correct.
Which of the following best describes 'liquidity'?
- The ease with which financial and other assets can be sold to the market.
- The ease with which financial and other assets can be converted into cash.
- Funds held in the form of stocks and shares.
- Funds held in the form of bonds.