Finmar
Modules
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Answers for Module 1
Review the correct answers and explanations for each question in this module.
Q1: What is a defining characteristic of a financial market according to the text?
Q2: Besides bills and coins, what else is considered money?
Q3: Which of these is NOT a characteristic of money mentioned in the text?
Q4: What is the "store of value" function of money?
Q5: The "unit of account" function of money means it is used to:
Q6: What were "Bullions" in the evolution of money?
Q7: According to the text, what is a potential consequence of having too much money in an economy?
Q8: Which measure of the money supply is the narrowest and primarily represents money used as a medium of exchange?
Q9: What constitutes the M2 measure of the money supply?
Q10: What is "transaction demand" for money?
Q11: Speculative demand for money has a negative relationship with what?
Q12: What does "present value" represent?
Q13: How does the Bangko Sentral ng Pilipinas (BSP) manage the money supply?
Q14: What happens in the loanable funds market when the BSP increases the money supply?
Q15: What is the key difference between the Classical and Keynesian views on money market equilibrium?
Q16: What is the "real interest rate"?
Q17: Which component of the nominal interest rate is designed to protect lenders from future price increases?
Q18: What is a primary effect of raising interest rates?
Q19: What is a primary reason for lowering interest rates?
Q20: What is "Commodity Money"?
Q21: Why does "Fiat Money" work?
Q22: Which of the following is a drawback of using checks?
Q23: What is the key feature of Bitcoin mentioned in the table?
Q24: A "financial instrument" is a contract that gives rise to a financial asset of one entity and what for another entity?
Q25: Which of the following is an example of a financial asset?
Q26: What are "time deposits"?
Q27: Which of the following is an example of a financial liability?
Q28: What does an "equity instrument" evidence?
Q29: A "derivative financial instrument" derives its value from what?
Q30: What is a "Futures Contract"?
Q31: How does a "Forward Contract" differ from a "Futures Contract"?
Q32: What is a key feature of a "Call Option"?
Q33: What risk do "Foreign Currency Futures" primarily address?
Q34: What is the purpose of an "Interest Rate Swap"?
Q35: Which function of money is related to its ability to be a "Standard of Deferred Payment"?
Q36: Which stage in the evolution of money came after the Barter System?
Q37: Are credit cards counted as part of the money supply?
Q38: Which money supply measure, M1, M2, or M3, is primarily associated with the "store of value" function?
Q39: Which type of money demand varies with GDP but does not depend on the interest rate?
Q40: What is the "Risk Premium" in the context of nominal interest rates?
Q41: What was the primary drawback of using metallic coins in ancient times?
Q42: The invention of paper currency was marked by the issuance of what?
Q43: What is a "Money Order"?
Q44: What is an example of an Equity Instrument?
Q45: What is the main role of the "money market" as described in the text?
Q46: An imbalance between the money and investment markets can cause what in the short run, according to Keynesians?
Q47: What is the technology behind Bitcoin?
Q48: A "financial liability" is a contractual obligation to do what?
Q49: What is "Petty cash"?
Q50: Which of these is NOT a key feature of money?
Q51: The ability to easily divide money into smaller units relates to which characteristic?
Q52: What is the primary purpose of the "payments system"?
Q53: In the context of the money market equilibrium, what does a higher "liquidity preference" lead to?
Q54: What happens to repayments on variable-rate loans when interest rates are lowered?
Q55: Trade receivables, represented by signed delivery receipts and sales invoices, are an example of what?
Q56: Why would an investor purchase a futures contract?
Q57: What is a "Bank Draft"?
Q58: What does a "cashless society" refer to?