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SHS Economics · Year 2

Money, Financial Institutions and Public Finance practice questions

Central banking, monetary policy, taxation, and the government budget.

25 questions in this topic: 8 recall, 10 applying skills and concepts, 6 strategic thinking and 1 extended thinking. Every one carries a written explanation.

Sample questions

5 of 25 questions in this topic. Sign up to answer them and see the explanations.

  1. Question 1Recall

    A person carries cash to buy food, pay bus fares and cover rent. This illustrates which motive for holding money?

    • aThe transaction motive
    • bThe precautionary motive
    • cThe speculative motive
    • dThe investment motive
  2. Question 2Recall

    Which of these is listed as an advantage of taxation?

    • aRevenue generation, since taxes fund public services like hospitals, schools and roads
    • bIt always eliminates the need for any government spending
    • cIt always increases the amount of money people are willing to invest, with no exceptions
    • dIt guarantees that businesses will never relocate abroad
  3. Question 3Skills & concepts

    A "flat tax rate" that stays constant regardless of income level is best classified as

    • aa proportional tax
    • ba progressive tax
    • ca regressive tax
    • dan indirect tax exclusively
  4. Question 4Skills & concepts

    A stock trader keeps cash ready to buy shares if the market price drops. This illustrates which motive for holding money?

    • aThe speculative motive
    • bThe transaction motive
    • cThe precautionary motive
    • dNone of the three motives
  5. Question 5Skills & concepts

    An investment bank helping a company raise capital by issuing stocks and bonds is performing which function?

    • aHelping companies raise capital through financial markets
    • bManaging a country's currency and money supply
    • cProviding retirement savings for individuals
    • dOffering non-profit community banking services

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