How well do you know about the types of money?
Money fuels all economic activities. Play this informative quiz to see how well you know about the types of money. Money is of various kinds; almost every country has its own currency and those who don't use the United States dollar as their currency. Play this quiz to learn interesting facts about money and also gauge your knowledge about this topic. This quiz would also enhance your knowledge. All the best!
- 1.
The money that has legal backing is called
- A.
Credit
- B.
Fiat money
- C.
Currency
- D.
None of the above
Correct Answer
B. Fiat moneyExplanation
Fiat money refers to currency that is issued by a government and is not backed by a physical commodity, such as gold or silver. Instead, its value is derived from the trust and confidence that people have in the government that issues it. This legal backing gives fiat money its value and makes it widely accepted as a medium of exchange. Credit refers to the borrowing or lending of money, while currency is a broader term that encompasses both fiat money and other forms of money, such as digital currencies. Therefore, the correct answer is Fiat money.Rate this question:
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- 2.
Full-bodied money
- A.
Value of money is more than the commodity
- B.
Whose value as money is equivalent to its value as a commodity
- C.
Token money
- D.
Value of money is less than the commodity
Correct Answer
B. Whose value as money is equivalent to its value as a commodityExplanation
The correct answer is "Token money". Token money refers to a type of currency where the value of the money is less than the commodity it represents. In other words, the intrinsic value of the money is lower than its face value. This means that the value of the money is derived from the trust and confidence placed in it by the people who use it, rather than the actual value of the material it is made from.Rate this question:
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- 3.
Which money has a face value?
- A.
Soft money
- B.
Fiat money
- C.
Hard money
- D.
None of the above
Correct Answer
B. Fiat moneyExplanation
Fiat money has a face value because it is issued and regulated by the government as legal tender. The face value of fiat money represents the nominal value assigned to it, which is typically printed on the currency itself. Unlike soft money, which refers to non-physical forms of currency such as checks or electronic transfers, fiat money is physical currency that can be used for transactions. Hard money, on the other hand, refers to currency backed by a physical commodity like gold or silver, and its value is determined by the market price of that commodity.Rate this question:
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- 4.
The money which is accepted due to the trust that exists between the payer and the payee is called
- A.
Hard money
- B.
Plastic money
- C.
Fiat Money
- D.
Fiduciary Money
Correct Answer
D. Fiduciary MoneyExplanation
Fiduciary money refers to the money that is accepted based on the trust between the payer and the payee. This trust is established because the money is backed by the faith and credit of the government or central bank. It is not backed by any physical commodity, such as gold or silver, but rather by the confidence and belief in the stability and value of the currency. Therefore, fiduciary money is the correct answer in this case.Rate this question:
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- 5.
Which of the following is a digital asset?
- A.
Fiat money
- B.
Cryptocurrency
- C.
Cheques
- D.
Commodity
Correct Answer
B. CryptocurrencyExplanation
Cryptocurrency is considered a digital asset because it exists solely in digital form and relies on encryption techniques to secure transactions. Unlike fiat money, which is physical currency issued by a government, cryptocurrency is decentralized and operates on a technology called blockchain. Cheques and commodities, on the other hand, are not digital assets as they are physical instruments or tangible goods.Rate this question:
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- 6.
Fiduciary money is generally paid in
- A.
Gold, silver, or paper money.
- B.
Commodity
- C.
Cheques
- D.
All of the above
Correct Answer
A. Gold, silver, or paper money.Explanation
Fiduciary money refers to currency that is not backed by a physical commodity, such as gold or silver, but rather by the trust and confidence of the people using it. It is generally paid in forms such as gold, silver, or paper money, which are widely accepted as a medium of exchange. This excludes commodities like cheques, which are not considered fiduciary money. Therefore, the correct answer is gold, silver, or paper money.Rate this question:
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- 7.
Money has to have the following qualities in order to be effective. Exactly which one has an impact on its value?
- A.
Durability
- B.
Limited supply
- C.
Uniformity
- D.
Portability
Correct Answer
B. Limited supplyExplanation
Limited supply has an impact on the value of money because when the supply of money is limited, it becomes more valuable. This is because there is less money available to be used for transactions, making each unit of money more scarce and therefore more valuable. When the supply of money is unlimited or abundant, its value decreases as there is more money available, leading to inflation and a decrease in purchasing power.Rate this question:
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- 8.
A Commodity is best described as?
- A.
Print money
- B.
An Item with inherent value in and of itself
- C.
Money in cash
- D.
Money in the form of cheques
Correct Answer
A. Print moneyExplanation
A commodity is best described as an item with inherent value in and of itself. This means that a commodity has value independent of any other factors, such as its use or its exchange rate. It is not necessarily related to money or cash, and it is not specifically referring to money in the form of cheques.Rate this question:
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- 9.
A commodity is
- A.
Durable
- B.
Divisible
- C.
Easily exchangeable
- D.
All of the above
Correct Answer
D. All of the aboveExplanation
A commodity is considered durable because it is capable of lasting for a long period of time without deteriorating. It is divisible because it can be divided into smaller units without losing its value or functionality. It is easily exchangeable because it can be readily bought and sold in the market. Therefore, the correct answer is "All of the above" as all three characteristics apply to a commodity.Rate this question:
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- 10.
When Fiat money is backed by Gold or Silver, it is generally called
- A.
Fiduciary money
- B.
Representative money
- C.
Hard money
- D.
Soft money
Correct Answer
B. Representative moneyExplanation
When Fiat money is backed by Gold or Silver, it is generally called representative money. This means that the paper currency represents a certain value of gold or silver, which can be exchanged for the precious metal upon demand. This system provides a sense of stability and trust in the currency, as it is backed by a tangible asset. Representative money allows for easier transactions and trade, as it eliminates the need to physically carry around gold or silver for every transaction.Rate this question:
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Our quizzes are rigorously reviewed, monitored and continuously updated by our expert board to maintain accuracy, relevance, and timeliness.
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Current Version
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Nov 16, 2023Quiz Edited by
ProProfs Editorial Team -
Nov 14, 2022Quiz Created by
Amit Mangal
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