Topic 6, Lessons 1 and 4 Quiz

Which of the following is NOT one of the functions of money?

• Store of Value

• Medium of Exchange

• Unit of Account

• Manner of payment

If money was not durable, what would likely happen?

• It would be easy to carry

• It would lose value quickly and need frequent replacement

• It would be easy to compare prices

• It would be accepted everywhere

How is money divisible?

• It can be split into smaller units for transactions.

• It can only be used in large amounts.

• It cannot be divided at all.

• It is only used for saving, not spending.

Which of the following is an example of commodity money?

• Gold coins

• Credit cards

• Paper checks

• Digital wallets

What supports the value of fiat currency?

• Trust in the issuing government

• Unlimited supply

• Personal ownership of printing facilities

• Lack of alternatives

About 45% of M1 is made up of what?

• Currency in circulation

• Gold reserves

• Savings accounts

• Loans

How are banks able to make loans?

• By using the money deposited by customers

• By printing new money

• By selling stocks

• By collecting taxes

Define default.

• Failure to repay a loan

• Earning interest on savings

• Using a credit card responsibly

• Paying off a mortgage early

Why is interest important for banks?

• It is their largest source of income

• It increases their expenses

• It reduces their profits

• It is not important

What is a credit union?

• A member-owned cooperative that provides financial services

• A government-run bank

• A private investment firm

• A company that only offers loans