Monetary System and Inflation Quiz

Which of the following is a function of money?

• a unit of account

• a store of value

• medium of exchange

• All of the above are correct.

You receive money as payment for babysitting your neighbors' children. This best illustrates which function of money?

• medium of exchange

• unit of account

• store of value

• liquidity

Any item that people can use to transfer purchasing power from the present to the future is called

• a medium of exchange.

• a unit of account.

• a store of value.

• None of the above is correct.

Which of the following is a store of value?

• cash and stocks

• cash but not stocks

• stocks but not cash

• neither cash nor stocks

Which of the following is a store of value?

• currency

• U.S. government bonds

• fine art

• All of the above are correct.

Commodity money is

• backed by gold.

• the principal type of money in use today.

• money with intrinsic value.

• receipts created in international trade that are used as a medium of exchange.

Fiat money

• has no intrinsic value.

• is backed by gold.

• is a medium of exchange but not a unit of account.

• is any close substitute for currency such as checkable deposits.

The primary difference between commodity money and fiat money is that

• commodity money is a medium of exchange but fiat money is not.

• fiat money is a medium of exchange but commodity money is not.

• commodity money has intrinsic value but fiat money does not.

• fiat money has intrinsic value but commodity money does not.

In a system of 100-percent-reserve banking,

• banks do not make loans.

• currency is the only form of money.

• deposits are banks’ only assets.

• All of the above are correct.

In a system of 100-percent-reserve banking,

• banks do not accept deposits.

• banks do not influence the supply of money.

• loans are the only asset item for banks.

• All of the above are correct.