IGSCE Economics Money and Banking

Which one of the following is the appropriate meaning of collateral?

• (a) It is the sum total of money borrowed from banks.

• (b) The amount borrowed from friends.

• (c) It is an asset of the borrower used as guarantee to a lender.

• (d) The amount invested in a business.

Which one of the following is a modern form of currency?

• (a) Gold

• (b) Paper notes

• (c) Silver

• (d) Copper

Which function of money allows stores to have a standard price system for the goods and services they sell?

• Store of Value

• Medium of Exchange

• Unit of Account

• Dolla Dolla Bills

Which characteristic of money is crucial for it to last awhile in circulation?

• durability

• divisibility

• portability

• uniformity

Which of the following is one of the three functions of money?

• portability

• scarcity

• store of value

• divisibility

How do banks increase the money supply?

• By printing their own money

• By getting loans from the Fed

• By issuing loans with their excess reserves

• They don't

If a consumers deposits $500 in the bank and the bank has to keep 10% in reserve, how much must they keep?

• $500

• $50

• $100

• $450

Evaluate how the function of money as a "medium of exchange" impacts economic efficiency.

• It decreases transaction costs and increases trade.

• It increases the cost of goods and services.

• It reduces the variety of products available in the market.

• It leads to a decrease in consumer spending.

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DOK Level 3: Strategic Thinking

Money has ______ if it can be broken down into smaller units so it can be used as needed.

• Divisibility

• Portability

• Scarcity

• Durability

The main functions of financial institutions is to receive ____________ and make _____________________.

• loans, taxes

• taxes, loans

• loans, deposits

• deposits, loans