Question 1

A ________________ risk can occur when a bank cannot fund demand for withdrawals.

Accepted Answer

A)  savings
B)  liquidity
C)  depositor
D)  systemicE) A) and C)
F) A) and B)

Question 2

Commodity money

Accepted Answer

A)  has no intrinsic value.
B)  has intrinsic value.
C)  is used exclusively in the economies of western Europe and North America.
D)  is used as reserves to back fiat money.E) B) and C)
F) All of the above

Question 3

The primary objective of the _______________ is to promote price stability throughout the euro area and to design and implement monetary policy that is consistent with this objective.

Accepted Answer

A)  SA Parliament
B)  Competition Commission of SA
C)  South African Reserve Bank
D)  African National CongressE) A) and C)
F) A) and B)

Question 4

Refiloe won a lottery prize of r₁ million.She put the money in the bank to save it for her daughter's university education.For Refiloe, money was functioning primarily as a

Accepted Answer

A)  unit of account.
B)  store of value.
C)  means of payment.
D)  type of short term loan.E) A) and B)
F) A) and C)

Question 5

What is the name of the policy designed to limit the risks across the financial sector by focusing on improving 'prudential' standards of operation that enhance stability and reduce risk?

Accepted Answer

A)  Governance.
B)  Compliance.
C)  Systemic policy.
D)  Macroprudential policy.E) C) and D)
F) None of the above

Question 6

Money and wealth are the same thing.

Accepted Answer

A) True 
 B)False  False

Question 7

Which one of the following statements is NOT correct?

Accepted Answer

A)  A repurchase agreement is the sale of a non-monetary asset together with an agreement to repurchase it a specified future date.
B)  The difference between the price at which a commercial bank sells an asset to the central bank and the price at which it agrees to buy it back can be expressed as an annualized percentage of the selling price, and this is called the refinancing rate.
C)  In SA the refinancing rate is known as the repo rate.
D)  If the central bank raises its refinancing rate then the commercial banks will try to increase their lending.E) A) and C)
F) A) and B)

Question 8

Which of the following statements is NOT true?

Accepted Answer

A)  The purchase of government bonds from the public increases the money supply.
B)  Monetary policy in the SA is set by the Monetary Policy Committee of the South African Reserve bank.
C)  When the central bank sells government bonds to the public, the money supply decreases.
D)  Monetary policy in SA is set by the Minister of Finance in consultation with the South African Reserve BankE) C) and D)
F) All of the above

Question 9

Commodity money has value independent of its use as money.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following statements about money is not true?

Accepted Answer

A)  A debit card is not really money because it is only a means of transferring money between accounts.
B)  All the wealth that people hold, in whatever form, should be considered as money.
C)  Wealth held in the current account you hold with your bank is almost as convenient for buying things as wealth held in your wallet, so the wealth in current accounts should be included in measures of money.
D)  In a complex economy, it is not easy to draw a clear dividing line between assets that should be considered as money and those that should not.E) A) and B)
F) None of the above

Question 11

You use rands to pay the owner of a restaurant for a delicious meal.The rand currency

Accepted Answer

A)  has no intrinsic value.The exchange is an example of barter.
B)  has no intrinsic value.The exchange is not an example of barter.
C)  has intrinsic value.The exchange is not an example of barter.
D)  has intrinsic value.The exchange is an example of barter.E) C) and D)
F) None of the above

Question 12

What is the difference between commodity money and fiat money? Why do people accept fiat money in trade for goods and services?

Accepted Answer

Commodity money has "intrinsic value," o...

Question 13

A bank's balance sheet consists of its

Accepted Answer

A)  assets and liabilities.
B)  cash and deposits.
C)  savings.
D)  liquidity.E) All of the above
F) B) and D)

Question 14

Are credit cards and debit cards money? What is the difference between credit cards and debit cards?

Accepted Answer

Neither credit cards nor debit cards are...

Question 15

Which one of the following is not included in the M1 money stock?

Accepted Answer

A)  Deposits with maturity up to two years.
B)  Overnight deposits.
C)  Currency in circulation.
D)  None of the above - they are all included in M1.E) A) and D)
F) None of the above A

Question 16

The South African Reserve Bank is the central bank of South Africa and its Monetary Policy Committee comprises members appointed by the Bank and by the Minister of Finance.

Accepted Answer

A) True 
 B)False  True

Question 17

Wealth held in ______________ is almost as convenient for buying things as wealth held as cash.

Accepted Answer

A)  savings accounts
B)  stock options
C)  trading accounts
D)  current bank accountsE) A) and B)
F) C) and D)

Question 18

In order for something to function well as a medium of exchange, it must be

Accepted Answer

A)  issued by a central government.
B)  readily and widely accepted in trade.
C)  backed by a valuable commodity.
D)  All of the above are correct.E) A) and C)
F) B) and C)

Question 19

If an economy's inflation rate is above target, the central bank would be most likely to

Accepted Answer

A)  encourage banks to provide loans by lowering the repo rate.
B)  encourage banks to provide loans by raising the repo rate.
C)  restrict bank lending by lowering the repo rate.
D)  restrict bank lending by raising the repo rate.E) B) and C)
F) A) and D)

Question 20

A central bank is designed to regulate the quantity of money made available in the economy.This is called the

Accepted Answer

A)  money supply.
B)  gold standard.
C)  stock assets.
D)  bonds.E) None of the above
F) B) and C)

Exam 9: The Monetary System

A ________________ risk can occur when a bank cannot fund demand for withdrawals.

Correct AnswerverifiedShow Answer

Commodity money

Correct AnswerverifiedShow Answer

The primary objective of the _______________ is to promote price stability throughout the euro area and to design and implement monetary policy that is consistent with this objective.

Correct AnswerverifiedShow Answer

Refiloe won a lottery prize of r₁ million.She put the money in the bank to save it for her daughter's university education.For Refiloe, money was functioning primarily as a

Correct AnswerverifiedShow Answer

What is the name of the policy designed to limit the risks across the financial sector by focusing on improving 'prudential' standards of operation that enhance stability and reduce risk?

Correct AnswerverifiedShow Answer

Money and wealth are the same thing.

Correct AnswerverifiedFalse

Which one of the following statements is NOT correct?

Correct AnswerverifiedShow Answer

Which of the following statements is NOT true?

Correct AnswerverifiedShow Answer

Commodity money has value independent of its use as money.

Correct AnswerverifiedShow Answer

Which of the following statements about money is not true?

Correct AnswerverifiedShow Answer

You use rands to pay the owner of a restaurant for a delicious meal.The rand currency

Correct AnswerverifiedShow Answer

What is the difference between commodity money and fiat money? Why do people accept fiat money in trade for goods and services?

Correct AnswerverifiedCommodity money has "intrinsic value," o...View AnswerShow Answer

A bank's balance sheet consists of its

Correct AnswerverifiedShow Answer

Are credit cards and debit cards money? What is the difference between credit cards and debit cards?

Correct AnswerverifiedNeither credit cards nor debit cards are...View AnswerShow Answer

Which one of the following is not included in the M1 money stock?

Correct AnswerverifiedA

The South African Reserve Bank is the central bank of South Africa and its Monetary Policy Committee comprises members appointed by the Bank and by the Minister of Finance.

Correct AnswerverifiedTrue

Wealth held in ______________ is almost as convenient for buying things as wealth held as cash.

Correct AnswerverifiedShow Answer

In order for something to function well as a medium of exchange, it must be

Correct AnswerverifiedShow Answer

If an economy's inflation rate is above target, the central bank would be most likely to

Correct AnswerverifiedShow Answer

A central bank is designed to regulate the quantity of money made available in the economy.This is called the

Correct AnswerverifiedShow Answer

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False

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Commodity money has "intrinsic value," o...
View Answer

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Neither credit cards nor debit cards are...
View Answer

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A

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True

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