Money & Banking (Cambridge (CIE) IGCSE Economics)

Exam Questions

1 hour29 questions
11 mark

What is the most important characteristic of money?

  • It has intrinsic value.

  • It is generally acceptable.

  • It is portable.

  • It is readily available.

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21 mark

What is not normally a function of the central bank of a country?

  • acting as lender of last resort

  • issuing notes and coins

  • operating the government’s monetary policy

  • setting the government’s budget

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31 mark

Which row shows a characteristic of money and a function of money?

 

characteristic

function

A

B

C

D

acceptability

cash

divisibility

store of value

medium of exchange

measure of value

portability

bank deposit

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    41 mark

    Which advantage do coins have that make them more suitable than banknotes to act as money?

    • They are more divisible.

    • They are more durable.

    • They are more portable.

    • They are more recognisable.

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    51 mark

    What is a function of a central bank?

    • collecting taxes

    • issuing currency

    • providing bank accounts for individuals

    • setting foreign trade tariffs

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    11 mark

    Which function do central banks and commercial banks have in common?

    • acting as a banker’s bank

    • controlling monetary policy

    • dealing with foreign exchange

    • supervising the banking system

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    21 mark

    What can a central bank increase in order to reduce consumer borrowing?

    • commercial bank deposits

    • government spending

    • the exchange rate

    • the rate of interest

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    31 mark

    Which organisations can directly fund the growth of firms?

     

    central bank

    commercial banks

    government

    A

    B

    C

    D

    no

    no

    yes

    yes

    yes

    yes

    no

    no

    no

    yes

    no

    yes

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      41 mark

      What is a function of a central bank?

      • collecting taxes

      • issuing currency

      • providing bank accounts for individuals

      • setting foreign trade tariffs

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      51 mark

      What is a function of a central bank?

      • accepting deposits from the public

      • determining tax rates

      • implementing monetary policy

      • lending to businesses

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      11 mark

      An African government has abandoned its own dollar and now uses the US dollar as its currency.

      Why would such a policy have been necessary?

      • Commercial banks restricted their lending.

      • Consumers only used credit cards rather than paper money.

      • Its own dollar no longer acted as a store of value.

      • The central bank controlled the issue of money too tightly.

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      21 mark

      A central bank acts as a lender of last resort especially in times of financial crisis.

      What is the purpose of this function?

      • to cover credit card debts of consumers

      • to provide liquidity to the banking system

      • to remove failing banks from the financial system

      • to safeguard the profits of the banking system

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      31 mark

      What would be least likely to act as a store of value during a period of rapid inflation?

      • cash

      • gold

      • property

      • shares

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      41 mark

      Which role is typically performed by commercial banks rather than central banks?

      • Managing a country's foreign exchange rates

      • Changing interest rates to influence money supply

      • Controlling the nation's fiscal policy

      • Providing retail banking services to individuals and businesses

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      51 mark

      Which characteristic of money ensures that it can be easily exchanged for goods and services without any loss in value?

      • Portability

      • Acceptability

      • Recognisability

      • Divisibility

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