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Money, Banking, and Financial Markets Practice Test: The Basics of Money
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Money has four main functions: standard of deferred payment, store of value, medium of exchange, and unit of account.  Money can also be defined as an item or medium of exchange that symbolizes perceived value. People generally accept it for the payment of goods and services, as well as the repayment of loans.  There are many types of money, including: Fiat money: Notes and coins backed by a government Commodity money: A good that has an agreed value, such as cowrie shells, bars of salt, furs, feathers, and cattle Fiduciary money: Money that takes its value from a trust or promise of... Show more
Money, Banking, and Financial Markets Practice Test: The Basics of Money
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25 Questions

1. Defining money becomes ________ difficult as the pace of financial innovation ________.
2. An examination of revised money supply statistics, when compared to the initial statistics, suggests that the initial statistics
3. During the past two decades an important characteristic of the modern payments system has been the rapidly increasing use of
4. Which of the following is not included in the monetary aggregate M2?
5. All but the most primitive societies use money as a medium of exchange, implying that
6. Small-denomination time deposits refer to certificates of deposit with a denomination of less than ________.
7. Which of the following is not a form of e-money?
8. ________ is a flow of earnings per unit of time.
9. In explaining the evolution of money
10. The evolution of the payments system from barter to precious metals, then to fiat money, then to checks can best be understood as a consequence of
11. ________ are the time and resources spent trying to exchange goods and services.
12. Monetary aggregates are
13. If peanuts serve as a medium of exchange, a unit of account, and a store of value, then peanuts are
14. Money is a
15. Dennis notices that jackets are on sale for $99. In this case money is functioning as a ________.
16. When compared to exchange systems that rely on money, disadvantages of the barter system include:
17. The conversion of a barter economy to one that uses money
18. Of the following, the largest is
19. When paper currency is decreed by governments as legal tender, legally it must be ________.
20. ________ is the relative ease and speed with which an asset can be converted into a medium of exchange.
21. A fall in the level of prices
22. During hyperinflations,
23. If an individual moves money from a money market deposit account to currency,
24. Whatever a society uses as money, the distinguishing characteristic is that it must
25. The difference between money and income is that

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