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Monetary policy

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Money

Quiz - Money, money, money?

1. Which of the following is not a function of money?

(a) * a medium of exchange
(b) * a store of value
(c) * a source of credit
(d) * a unit of account
(e) * a standard of deferred payment

       

2. Identify each of the following as true or false.

  • Only money can act as a store of value.

(a) * true
(b) * false

   

  • Current account deposits are included in the money supply measure MO.

(a) * true
(b) * false

   

  • Credit is not money.

(a) * true
(b) * false

   

  • Inflation will damage the store of value function of money.

(a) * true
(b) * false

   

  • Loans represent liabilities to a commercial bank.

(a) * true
(b) * false

   

  • Cash in the tills is an asset to a commercial bank.

(a) * true
(b) * false

   

  • Barter is an inefficient medium of exchange as it requires a double coincidence of wants.

(a) * true
(b) * false

   

  • Volatile inflation makes money more effective as a standard of deferred payment.

(a) * true
(b) * false

   

  • Divisibility is a vital attribute of money.

(a) * true
(b) * false

   

3. Keynes identified three motives for holding money. One of them is known as the 'transactions' demand. What are the other two?
(Select one or more answers)

(a) * speculative
(b) * reactionary
(c) * precautionary
(d) * consumption

       

4. Which of the following is the most commonly used modern measure of narrow money?

(a) * M0
(b) * M1
(c) * M2
(d) * M3
(e) * M4

       

5. Which of the following is the most commonly used modern measure of broad money?

(a) * M0
(b) * M1
(c) * M2
(d) * M3
(e) * M4

       

6. Which of the following are included in the M0 measure of the money supply?

  • Bank deposit accounts

(a) * Yes
(b) * No

       

  • Notes

(a) * Yes
(b) * No

       

  • Coins

(a) * Yes
(b) * No

       

  • Bank current accounts

(a) * Yes
(b) * No

       

  • Banks balances at the Bank of England

(a) * Yes
(b) * No

       

7. Which of the following are essential attributes of money?

  • Portability

(a) * Yes
(b) * No

       

  • Volatility

(a) * Yes
(b) * No

       

  • Divisibility

(a) * Yes
(b) * No

       

  • Easy to print

(a) * Yes
(b) * No

       

  • Universally acceptable

(a) * Yes
(b) * No

       

8. Identify the following as assets or liabilities of a commercial bank.

  • Personal loans to customers

(a) * Asset
(b) * Liability

   

  • Cash in tills

(a) * Asset
(b) * Liability

   

  • Customers deposits in their accounts

(a) * Asset
(b) * Liability

   

  • Mortgages

(a) * Asset
(b) * Liability

   

  • Gilt-edged securities

(a) * Asset
(b) * Liability

   

  • Balances held at the Bank of England

(a) * Asset
(b) * Liability

   

9. Which of the following roles is still carried out by the Bank of England?
(Select one or more answers)

(a) * Managing the level of National Debt
(b) * Designing and printing banknotes
(c) * Supervising and regulating financial institutions
(d) * Setting the level of interest rates
(e) * Managing foreign exchange reserves