A level Money Theory Quiz 1

15 Questions

Quiz Description

In this economics quiz, we shall be looking at money theory. Under money theory, we will be exploring some exciting concepts such as currency, the types of money, the functions of money, cash reserve ratio (CRR), etc. It is really going to be an exciting activity answering this quiz.

Money is an economic unit that generally functions as a recognized medium of exchange for transactional purposes in an economy. It is commonly referred to as currency, and each government has its own money system. Nowadays, cryptocurrencies are being developed for financing and also for international exchange across the world. In order to be useful as money, a currency should be durable, fungible, recognizable, portable, and of course stable. Money functions as a medium of exchange, a store of value, a unit of account, and a standard of deferred payment. Also, money exists in various types such as fiduciary money, commodity money, fiat money, and commercial bank money.

Do you have what it takes to answer this quiz correctly? Why don’t you find out by trying it out? Good luck as you practice with us. 

1:

 Which among the following is considered to be the most liquid asset? 


Correct
  • 1:
    Gold
  • 2:
    Money
  • 3:
    Land
  • 4:
    Treasury bonds
2:

 The number of times a unit of money exchanges hands during a unit period of time is known as: 


Correct
  • 1:
    velocity of circulation of money
  • 2:
    speed of circulation of money
  • 3:
    momentum of circulation of money
  • 4:
    count of circulation of money
3:

  Currency notes and coins are called as: 


Correct
  • 1:
    Flat money
  • 2:
    Legal tenders
  • 3:
    Fiat money
  • 4:
    Both b and c
4:

 In the terminology of economics and money demand, the terms M1 and M2 are also known as : 


Correct
  • 1:
    Short money
  • 2:
    Long money
  • 3:
    Broad money
  • 4:
    Narrow money
5:

 In the terminology of economics and money demand, the terms M3 and M4 are also known as : 


Correct
  • 1:
    Short money
  • 2:
    Long money
  • 3:
    Broad money
  • 4:
    Narrow money
6:

 What is the reserve deposit ration (rdr)? 


Correct
  • 1:
    the proportion of money RBI lends to commercial banks
  • 2:
    the proportion of total deposits commercial banks keep as reserves
  • 3:
    the total proportion of money that commercial banks lend to the customers
  • 4:
    none of the above
7:

  What is the Cash Reserve Ratio (CRR)?

a) the fraction of the deposits that commercial banks lend to the customers
b) the fraction of the deposits that RBI must keep with commercial banks
c) the fraction of the deposits that commercial banks must keep with RBI
d) none of the above 


Correct
  • 1:
    the fraction of the deposits that commercial banks lend to the customers
  • 2:
    the fraction of the deposits that RBI must keep with commercial banks
  • 3:
    the fraction of the deposits that commercial banks must keep with RBI
  • 4:
    none of the above
8:

 Which of the following shows the meaning of the term M3? 


Correct
  • 1:
    M1 + post office savings deposits.
  • 2:
    Currency + coins + demand deposits of banks
  • 3:
    M1 + Time Deposits of Banks.
  • 4:
    None of the above.
9:

 Which of the following is money proper? 


Correct
  • 1:
    Bonds
  • 2:
    Government securities
  • 3:
    Time deposits
  • 4:
    Currency notes and demand deposits.
10:

  M1 = _________ + Deposits with public 


Correct
  • 1:
    Currency
  • 2:
    Term deposits
  • 3:
    Post office savings
  • 4:
    None of these.
11:

 Which of the following will not come under narrow money? 


Correct
  • 1:
    Currency in circulation
  • 2:
    Demand Deposit
  • 3:
    Time Deposit
  • 4:
    None of these
12:

 M2 is defined as: 


Correct
  • 1:
    M1 + net time deposits
  • 2:
    M1 + total deposit with post office
  • 3:
    M1 + saving deposit with post office
  • 4:
    Currency plus demand deposits in banks
13:

 The issue of one rupee currency note in India is the liability of the: 


Correct
  • 1:
    Issue Department of the RBI
  • 2:
    Government of India
  • 3:
    State Bank of India
  • 4:
    Banking Department of the RBI
14:

 Bills of exchange are sometimes known as: 


Correct
  • 1:
    Near money
  • 2:
    Transferable assets
  • 3:
    Claims receivable
  • 4:
    Business obligations
15:

 Which of the following measures of money supply is considered narrow concept of money supply? 


Correct
  • 1:
    M1
  • 2:
    M2
  • 3:
    M3
  • 4:
    M4

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A level Money Theory Quiz 1
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