BUSI 321
Money & The Financial System
Finals Exam (Qns & Ans)
2025
General Instructions
1. Read All Questions Carefully: Make sure you understand each question.
2. Time Management: You have a specific amount of time to complete the exam.
Keep an eye on the clock and pace yourself.
3. Allowed Materials: Only use materials that are explicitly allowed. Unauthorized
materials can lead to disqualification.
4. ANS Format: Follow the required format for your ANS. For example, multiple-
choice questions might need you to select the best ANS, while essay questions
require detailed responses.
5. Academic Integrity: Adhere to the university's honor code. Any form of cheating or
plagiarism is strictly prohibited.
6. Technical Requirements: Ensure your computer and internet connection are
stable. For online exams, you might need a webcam and microphone for proctoring
purposes.
7. Submission: Submit your ANS before the time expires. Late submissions might
not be accepted.
©2024/2025
,1. Which of the following is considered a primary function of
money?
- A) Store of value
- B) Unit of account
- C) Medium of exchange
- D) All of the above
- Correct ANS: D
Rationale: Money serves all three functions: a medium of
exchange, a unit of account, and a store of value.
2. Which of the following institutions primarily manages a
country's monetary policy?
- A) Commercial banks
- B) Central banks
- C) Investment banks
- D) Credit unions
- Correct ANS: B
Rationale: Central banks are responsible for formulating
and implementing monetary policy.
©2024/2025
,3. In the context of the money supply, M1 includes:
- A) Savings accounts
- B) Money market accounts
- C) Currency and checkable deposits
- D) Stocks and bonds
- Correct ANS: C
Rationale: M1 is composed of currency in circulation and
checkable deposits, therefore it is the most liquid form of
money.
4. Which of the following is a characteristic of fiat money?
- A) It is backed by a physical commodity.
- B) Its value is determined solely by government decree.
- C) It has intrinsic value.
- D) It is universally accepted in all economies.
- Correct ANS: B
Rationale: Fiat money has value because the government
maintains it and people have faith in its value.
5. What is the primary goal of expansionary monetary policy?
©2024/2025
, - A) Increase inflation rates
- B) Reduce unemployment
- C) Stabilize foreign exchange rates
- D) Dampen economic growth
- Correct ANS: B
Rationale: Expansionary monetary policy aims to increase
money supply and lower interest rates to boost economic
activities and reduce unemployment.
Fill-in-the-Blank Questions
6. The ________ theory suggests that the value of money is
determined by the quantity of money in circulation.
- Correct ANS: Quantity
Rationale: The Quantity Theory of Money correlates the
money supply with its value and economic output.
7. In a barter system, goods are exchanged directly without
the use of ________.
- Correct ANS: Money
Rationale: A barter system relies entirely on the direct
exchange of goods and services.
©2024/2025
Money & The Financial System
Finals Exam (Qns & Ans)
2025
General Instructions
1. Read All Questions Carefully: Make sure you understand each question.
2. Time Management: You have a specific amount of time to complete the exam.
Keep an eye on the clock and pace yourself.
3. Allowed Materials: Only use materials that are explicitly allowed. Unauthorized
materials can lead to disqualification.
4. ANS Format: Follow the required format for your ANS. For example, multiple-
choice questions might need you to select the best ANS, while essay questions
require detailed responses.
5. Academic Integrity: Adhere to the university's honor code. Any form of cheating or
plagiarism is strictly prohibited.
6. Technical Requirements: Ensure your computer and internet connection are
stable. For online exams, you might need a webcam and microphone for proctoring
purposes.
7. Submission: Submit your ANS before the time expires. Late submissions might
not be accepted.
©2024/2025
,1. Which of the following is considered a primary function of
money?
- A) Store of value
- B) Unit of account
- C) Medium of exchange
- D) All of the above
- Correct ANS: D
Rationale: Money serves all three functions: a medium of
exchange, a unit of account, and a store of value.
2. Which of the following institutions primarily manages a
country's monetary policy?
- A) Commercial banks
- B) Central banks
- C) Investment banks
- D) Credit unions
- Correct ANS: B
Rationale: Central banks are responsible for formulating
and implementing monetary policy.
©2024/2025
,3. In the context of the money supply, M1 includes:
- A) Savings accounts
- B) Money market accounts
- C) Currency and checkable deposits
- D) Stocks and bonds
- Correct ANS: C
Rationale: M1 is composed of currency in circulation and
checkable deposits, therefore it is the most liquid form of
money.
4. Which of the following is a characteristic of fiat money?
- A) It is backed by a physical commodity.
- B) Its value is determined solely by government decree.
- C) It has intrinsic value.
- D) It is universally accepted in all economies.
- Correct ANS: B
Rationale: Fiat money has value because the government
maintains it and people have faith in its value.
5. What is the primary goal of expansionary monetary policy?
©2024/2025
, - A) Increase inflation rates
- B) Reduce unemployment
- C) Stabilize foreign exchange rates
- D) Dampen economic growth
- Correct ANS: B
Rationale: Expansionary monetary policy aims to increase
money supply and lower interest rates to boost economic
activities and reduce unemployment.
Fill-in-the-Blank Questions
6. The ________ theory suggests that the value of money is
determined by the quantity of money in circulation.
- Correct ANS: Quantity
Rationale: The Quantity Theory of Money correlates the
money supply with its value and economic output.
7. In a barter system, goods are exchanged directly without
the use of ________.
- Correct ANS: Money
Rationale: A barter system relies entirely on the direct
exchange of goods and services.
©2024/2025
