Economics Quiz on Money Functions

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Questions and Answers

Which one of the following statements is true regarding the effects of higher inflation?

Higher inflation has a negative effect on lenders of money. (correct)

Higher inflation has a negative effect on borrowers of money.

Higher inflation positively impacts the purchasing power of all parties.

Higher inflation does not affect the overall economy.

Which statement accurately describes one of money's functions?

Money primarily functions as a medium of exchange only.

Money has no role in the determination of prices.

The unique function of money is as a store of value.

Money's function as a unit of account distinguishes it from other assets. (correct)

What is the nature of the South African banking market?

The South African banking market resembles a monopoly.

The South African banking market is classified as an oligopoly. (correct)

The South African banking market is a competitive environment with many small banks.

The South African banking market is unregulated.

Which statement regarding the government's ability to manage currency is correct?

The government can print money at its discretion. Signup and view all the answers

What is the origin of the term 'bankrupt'?

The word 'bankrupt' comes from the Roman city of Roma. Signup and view all the answers

What does the term 'collateral' refer to in relation to a loan?

An asset of value pledged against the loan Signup and view all the answers

How long should one ideally hold an investment property to make it worthwhile, according to the guidelines provided?

At least 5 years Signup and view all the answers

What does 'Caveat Emptor' mean?

Let the buyer beware Signup and view all the answers

What type of payment structure is described by the term 'Loan'?

Smaller payments followed by one large payment at the end Signup and view all the answers

What do the initials 'KYC' stand for in relation to financial transactions?

Know Your Client Signup and view all the answers

Which one of the following statements is false?

All the provided statements are false. Signup and view all the answers

Which one of the following statements is false?

The debt to personal income ratio in South Africa is about 75 cents of each Rand. Signup and view all the answers

Which one of the following statements is false?

People normally retire at age 50. Signup and view all the answers

Which one of the following statements is true?

Roughly 28% of South Africans are part of the 'Sandwich generation'. Signup and view all the answers

Which one of the following statements is true?

Investors using the proportional post-retirement withdrawal strategy can withdraw proportionately from all assets. Signup and view all the answers

Study Notes

Multiple Choice Questions Overview

Higher inflation negatively impacts lenders of money, as it diminishes the real value of repayments.
The South African Reserve Bank (SARB) balances the needs of lenders and borrowers.
The SARB can provide lenders with more liquid assets that carry lower risk profiles.
Governments have the capacity to print money, influencing monetary policy.

Functions of Money and Banking

Money serves four primary functions: medium of exchange, unit of account, store of value, and standard of deferred payment.
The distinctive function of money that sets it apart from other assets is its role as a unit of account.
The South African banking market is characterized as an oligopoly, meaning few institutions dominate the sector.

Retirement and Debt in South Africa

A significant percentage of South Africans (less than 10%) face challenges with retirement security.
"Mashonisas" refers to local informal lenders, commonly known as loan sharks.
Despite high debt ratios, South Africa's personal income ratio suggests that many individuals are over-leveraged.

Retirement Products and Planning

A group retirement annuity is essentially multiple individual retirement annuities managed together.
Retirement planning spans two phases: pre-retirement and post-retirement.
Proper post-retirement planning ensures sustainable income through effective resource allocation.

Specific Terminology

Collateral is defined as an asset of value pledged against a loan.
Investment property purchases require a period of due diligence (at least three months of research) before commitment.
Holding an investment property for a minimum of five years is advisable to ensure profitability.
Abbreviations: KYC stands for "Know Your Customer," and GEPF stands for "Government Employees Pension Fund."
A loan can include an inflated final payment, where smaller periodic payments are made beforehand.
"Caveat Emptor" translates to "Let the buyer beware," emphasizing the responsibilities of buyers in transactions.

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Description

Test your understanding of the functions of money and the role of the SARB in the economy. This quiz will cover true or false statements related to inflation, lending, and the responsibilities of financial authorities. Challenge yourself and see how well you grasp the essential concepts of economics!