Monetary Theories and Digital Assets Quiz
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Monetary Theories and Digital Assets Quiz

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@PrestigiousTruth

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Questions and Answers

What is the primary reason money is said to have arisen spontaneously?

  • To raise state revenues
  • To serve as a tangible commodity
  • To eliminate inefficiencies of barter (correct)
  • To create a standardized measure of value

    • According to metallist theory, what quality must money possess?

  • Intrinsic value and utility (correct)
  • High liquidity in all markets
  • Only government approval
  • Simplicity in design

    • What is a characteristic of metallic currencies in metallist theory?

  • They are exclusively paper-based
  • They must be electronic
  • They require frequent official appraisal
  • They have intrinsic value as commodities (correct)

    • What is a challenge when using commodity money?

    <p>Guaranteeing its quantity and quality</p> Signup and view all the answers

    What role does the state play according to chartalism theory?

    <p>It mandates accepted mediums for payments</p> Signup and view all the answers

    What does metallist theory primarily focus on?

    <p>The intrinsic value of money as a physical commodity</p> Signup and view all the answers

    Which statement best describes the minting process in relation to commodity money?

    <p>Minting functions as a guarantee of authenticity</p> Signup and view all the answers

    Why might the intrinsic value of money vary?

    <p>Tied to its non-monetary uses</p> Signup and view all the answers

    What characterizes cryptocurrencies?

    <p>They are decentralized and powered by blockchain.</p> Signup and view all the answers

    What is a distinguishing feature of NFTs?

    <p>They represent unique digital assets.</p> Signup and view all the answers

    According to Minsky, what is a key challenge in creating money?

    <p>Getting it accepted as payment is problematic.</p> Signup and view all the answers

    How does the Metallist Theory define the origin of money?

    <p>Money arose from barter based on valuable commodities.</p> Signup and view all the answers

    What does the Chartalist Theory propose about money?

    <p>State-sanctioned means of payment determine money's value.</p> Signup and view all the answers

    What is a characteristic shared by cryptocurrencies in the Metallist vs. Chartalist debate?

    <p>Cryptocurrencies possess features of both intrinsic worth and community validation.</p> Signup and view all the answers

    What issue is addressed by the concept of ‘double coincidence of wants’ in Metallist theory?

    <p>Both parties in a barter must have what the other desires.</p> Signup and view all the answers

    In the context of money theories, what role does acceptance play according to Minsky?

    <p>Acceptance is the main barrier to creating money.</p> Signup and view all the answers

    What is the main purpose of an Initial Coin Offering (ICO)?

    <p>Fundraising for blockchain projects</p> Signup and view all the answers

    Which statement accurately describes utility tokens in the context of ICOs?

    <p>They provide holders exclusive access to future services/products.</p> Signup and view all the answers

    Based on EY's analysis of 141 ICOs in 2017, what percentage was below listing price as of September 2018?

    <p>86%</p> Signup and view all the answers

    What is a characteristic of Bitcoin?

    <p>Proof-of-work system</p> Signup and view all the answers

    What do stablecoins seek to achieve?

    <p>Pegging to stable assets</p> Signup and view all the answers

    Which of the following examples represents a Central Bank Digital Currency (CBDC)?

    <p>China's Digital Yuan</p> Signup and view all the answers

    What can be expected as a consequence of Bitcoin's fixed supply if market growth occurs?

    <p>Significant deflation</p> Signup and view all the answers

    In terms of risk, what is a common issue associated with ICOs?

    <p>Potential for complete loss of value</p> Signup and view all the answers

    What is the primary backing mechanism for fiat-backed stablecoins?

    <p>They are backed 1:1 by fiat currency held in reserve.</p> Signup and view all the answers

    What happens if the value of the crypto collateral for a crypto-backed stablecoin drops?

    <p>More collateral is required or the stablecoin can be liquidated.</p> Signup and view all the answers

    Which of the following is a key risk associated with algorithmic stablecoins?

    <p>The algorithm may fail to maintain the peg.</p> Signup and view all the answers

    Which stablecoin is known for being backed by Ethereum and using smart contracts for stability?

    <p>DAI</p> Signup and view all the answers

    How do algorithmic stablecoins respond when their price rises above the pegged value?

    <p>They mint new coins to increase supply.</p> Signup and view all the answers

    What is a significant concern regarding the transparency of Tether (USDT)?

    <p>Transparency issues about its reserves have caused concern.</p> Signup and view all the answers

    What characterizes the backing of algorithmic stablecoins compared to fiat and crypto-backed stablecoins?

    <p>They adjust supply based on market conditions.</p> Signup and view all the answers

    Why are crypto-backed stablecoins often over-collateralized?

    <p>To account for the volatility of the collateral asset.</p> Signup and view all the answers

    What fundamental change did Tether make in its backing on 14 March 2019?

    <p>Incorporated loans to affiliate companies as part of its backing</p> Signup and view all the answers

    What differentiates Central Bank Digital Currencies (CBDCs) from traditional cryptocurrencies?

    <p>CBDCs are fully regulated and backed by the government.</p> Signup and view all the answers

    What is a known advantage of wholesale CBDCs?

    <p>Provide instant settlement and reduce risk in the financial system</p> Signup and view all the answers

    Which of the following statements about CBDCs is false?

    <p>CBDCs are primarily based on consumer usage data.</p> Signup and view all the answers

    What is the primary function of retail CBDCs?

    <p>Be used by individuals for daily transactions</p> Signup and view all the answers

    What was the alleged misuse involving Tether and the Bitfinex exchange?

    <p>Using Tether's funds to cover up missing funds amounting to $850 million</p> Signup and view all the answers

    Which of the following describes the primary benefit of the Bank of Canada’s Jasper Project?

    <p>It reduces settlement times and enhances security for financial transactions</p> Signup and view all the answers

    What is a key characteristic of CBDCs compared to traditional payment platforms like PayPal and Alipay?

    <p>CBDCs do not collect user data for marketing purposes</p> Signup and view all the answers

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