Sample questions
Sample questions with answers.
From the practice pool, with the answers shown. The exam asks its own set of 40.
Money, Currency, and Credit
1. A friend says "money" and "currency" mean exactly the same thing. Going by how this course opens, what's the cleanest way to correct her?
- Money exists only as coins and banknotes, so currency is the only kind of money
- Currency is money's physical form — its notes and coins — not a synonym Correct answer
- Credit and currency mean the same thing, and money is a separate, older idea
- Currency is a form of credit that banks create when they lend
Why: The course opens by pulling money, currency and credit apart as distinct layers: currency is the issued notes and coins, one concrete expression of the broader concept of money.
Why Gold and Silver Became Money
2. Before national currencies, why does the course say gold and silver came to function as money in the first place?
- They were simply the first goods that people happened to barter with
- They have physical properties — durability, divisibility — good for trade Correct answer
- A king first declared them legal tender by royal decree, and trade followed
- Central banks minted them as reserves to back paper notes from the start
Why: The course roots gold and silver's monetary role in their physical properties — durability, divisibility, scarcity — not in a founding legal decree.
Interest and Time
3. What creates mounting pressure when debts are fixed?
- Debts become optional to repay
- Debts automatically shrink each year
- Interest rates disappear in downturns
- Interest keeps accruing over time Correct answer
Public Debt Mechanics
4. Debt is not merely a burden - it is _____.
- infrastructure Correct answer
- punishment
- inflation
- illusion
Deposit Expansion & the Multiplier
5. What best describes reserves in the banking system?
- Loans from commercial banks to households
- Physical cash held in bank vaults
- Obligations of the central bank to commercial banks Correct answer
- Government bonds held by the public
Federal Reserve Float
6. Between the customer being credited and the payer's bank being debited, temporary _____ appeared. What filled that gap?
- inflation
- collateral
- default
- liquidity Correct answer
Money, Currency, and Credit
7. Back when the economy was small, money could be a physical _____.
- asset Correct answer
- law
- deception
- punishment
Why Gold and Silver Became Money
8. What is the key advantage of gold having high value in a small volume?
- It guarantees stable prices in all markets
- It becomes easier to transport and store Correct answer
- It prevents counterfeiting completely
- It increases its usefulness as a tool material