Q 1 Using money as a unit of account ...

[1] strengthens its store of value.

[2] lowers transaction costs.

[3] promotes economic efficiency.

[4] saves purchasing power.

Q 2 Which one of the following statements about flow and stock is correct?

[1] Income is a flow and wealth is a stock.

[2] Money represents a flow.

[3] Wealth is a flow.

[4] Salaries and bonds are examples of stock.

Q 3 A coupon bond pays the ________ of the bond a ________ interest payment ________until maturity date.

[1] owner; varying; every month

[2] buyer; fixed; once a year

[3] investor; once-off; once a month

[4] owner; fixed; every year

Q 4 The concept of ______ is based on the notion that a rand paid to you in the future is, in general, less valuable to you than a rand today.

[1] deflation

[2] interest

[3] present discounted value

[4] future discounted value

Q 5 What is the present value of $3000 to be paid in 2 years if the interest rate is 12%?

[1] $2391

[2] $2391.58

[3] $2395

[4] $2395.28

Q 6 When the interest rate ______ the price of bonds ______.

[1] increases; increases

[2] decreases; increases

[3] increases; stays the same

[4] decreases; stays the same

Q 7 When the yield curve is upward sloping, expectations theory suggests that short-term interest rates are expected to ...

[1] increase.

[2] decrease.

[3] remain the same.

[4] either increase or decrease.