Question 1

What gives paper currency value?
A) Having a high supply and high demand
B) Having a high supply and low demand
C) Having a limited supply and relatively high demand
D) Having a low supply and low demand

Accepted Answer

Paper currency has value because there is a limited supply of it and a relatively high demand. The value of currency can also be influenced by factors such as inflation, economic stability, and market confidence. A high supply and low demand for currency would actually decrease its value.

Question 2

In which city are coins made?
A) Saint Louis
B) Philadelphia
C) New York
D) Washington, D.C

Accepted Answer

Coins in the United States are made at the United States Mint which has several locations throughout the country. However, the main production facility for circulating coins is located in Philadelphia, Pennsylvania.

Question 3

Currently,which two U.S.cities produce coins for circulation?
A) New York and Washington, D.C
B) Atlanta and Seattle
C) Philadelphia and Denver
D) Boston and Houston

Accepted Answer

The two U.S. cities that currently produce coins for circulation are Philadelphia and Denver.

Question 4

Where is one place where paper money is printed?
A) San Francisco
B) Washington, D.C
C) Denver
D) Philadelphia

Accepted Answer

Paper money in the United States is primarily printed at the Bureau of Engraving and Printing in Washington, D.C.

Question 5

What is compounding?
A) Depositing money in the bank
B) When interest is added to your initial deposit and you begin to earn interest on interest
C) Your initial deposit
D) The amount of interest you pay on a loan

Accepted Answer

Compounding is the process of earning interest on both the initial deposit and any accumulated interest that has been added to it over time. This can lead to significant growth of savings or investments over the long term.

Question 6

What gives money its value?
A) Supply and demand
B) Backed by gold
C) Backed by silver
D) Present values

Accepted Answer

Money derives its value from supply and demand, meaning that it is valuable because people believe it is valuable and are willing to exchange goods and services for it. While money used to be backed by gold and silver in the past, this is no longer the case for most modern currencies. Present values also do not determine the value of money, as the value of money can fluctuate based on a variety of economic and political factors.

Question 7

The annual percentage yield indicates:
A) How much interest is earned in a year if allowed to compound
B) the total amount of money invested plus interest
C) The interest rate
D) All of these

Accepted Answer

The annual percentage yield (APY) indicates how much interest is earned in a year if allowed to compound. It takes into account the interest rate and the frequency of compounding, giving a more accurate representation of the actual return on an investment. It does not indicate the total amount of money invested plus interest, which is the future value, nor is it the same as the interest rate.

Question 8

What is paper money backed by?
A) Gold
B) Gold and silver
C) The full faith and credit of the U.S.government and the Federal Reserve Bank
D) Silver

Accepted Answer

Paper money in the United States is not backed by gold, silver, or any other tangible commodity. Instead, it is backed by the full faith and credit of the U.S. government and the Federal Reserve Bank. This means that the value of the currency is supported by the credibility of the U.S. government and the strength of the country's economy.

Question 9

Paper money is produced by the _________________.
A) Federal Reserve Bank
B) United States Treasury
C) Bureau of Engraving and Printing
D) Fort Knox Mint

Accepted Answer

The Bureau of Engraving and Printing is responsible for producing paper money in the United States. The Federal Reserve Bank helps to distribute the money, and the US Treasury manages the overall financial system. Fort Knox is a depository of gold, but does not produce paper money.

Question 10

If you have $3,000 today with a 10% APY,how much will you have one year from now?
A) $3,200
B) $3,300
C) $3,100
D) $3,500

Accepted Answer

APY stands for Annual Percentage Yield. This means that if you invest $1,000 at 10% APY, you will earn $100 in one year. Therefore, if you have $3,000 today at 10% APY, you will earn $300 in one year. So your total would be $3,300 (original $3,000 + $300 interest earned). Therefore, the correct answer is B.

Question 11

Which of the following is paper money backed by?
A) The U.S.president
B) The full faith and credit of the U.S.government and the Federal Reserve Bank
C) The Federal Reserve Bank
D) The Bureau of Engraving and Printing and the Federal Reserve Bank

Accepted Answer

Paper money in the United States is backed by the full faith and credit of the U.S. government and the Federal Reserve Bank, which means that people trust that the government will honor the value of the currency and that the Federal Reserve Bank will ensure its stability and availability.

Question 12

What is the money in the United States backed by?
A) Gold
B) Silver
C) The full faith and credit of the U.S government
D) The president's oath of office
E) The Chinese yen

Accepted Answer

The money in the United States is backed by the full faith and credit of the U.S government. This means that the government guarantees the value of the currency and ensures that it can be used to settle debts and taxes. While in the past, the U.S dollar was backed by gold, this is no longer the case since the United States government abandoned the gold standard in 1971.

Question 13

The process whereby the value of an investment increases exponentially over time is called the _________________.
A) Annual percentage rate
B) Time value
C) Annual percentage yield
D) Compounding

Accepted Answer

The process described in the question is compounding, which is the process of earning interest on both the initial investment and the accumulated interest over time. Option A refers to an annual interest rate, option B refers to the concept that money has greater value in the present than in the future, and option C refers to the annual percentage yield, which takes into account compounding but does not describe the process of exponential growth over time.

Question 14

Paper money is backed by the credit and faith of the U.S.government and _________________.
A) Wells Fargo
B) The Federal Union
C) The USDA
D) The Federal Reserve

Accepted Answer

Paper money is backed by the credit and faith of the U.S. government and the Federal Reserve. The Federal Reserve is responsible for managing the money supply, regulating banks, and ensuring the stability of the financial system.

Question 15

Who controls the circulation of money in the United States?
A) Coin mints
B) The Bureau of Engraving and Printing
C) The Federal Reserve
D) The president of the United States

Accepted Answer

The Federal Reserve, also known as the "central bank" of the United States, is in charge of regulating the money supply and circulation in the country. They set monetary policy, control interest rates, and manage the banking system to ensure economic stability. While the Bureau of Engraving and Printing produces paper currency and coins, they do so under the direction of the Federal Reserve. The president has some influence over economic policy, but ultimately the Federal Reserve has the most control over the circulation of money.

Question 16

If you invest $100 and receive a 12% APR (annual percentage rate),what will your balance be at the end of the year?
A) $121.12
B) $121.00
C) $112.00
D) $100.12

Accepted Answer

The balance at the end of the year would be $112.00 because a 12% APR on a $100 investment results in $12 of interest ($100 * 12% = $12), making the total $112.

Question 17

What two cities are currently producing coins?
A) Denver and Philadelphia
B) Philadelphia and San Francisco
C) Denver and San Francisco
D) Fort Worth and Washington, D.C

Accepted Answer

The U.S. Mint facilities in Denver and Philadelphia are the primary locations for producing coins.

Question 18

When interest is added to your initial deposit and you begin to earn interest on interest,this is known as
A) The annual percentage rate
B) The time value of money
C) Compounding
D) The future value of money

Accepted Answer

Compounding refers to the process of adding interest to the initial deposit and then earning interest on the new total, including the previously earned interest. This leads to a faster growth of the investment than simple interest, where interest is only calculated on the principal amount. The annual percentage rate (APR) represents the annualized interest rate charged on a loan or earned on an investment. The time value of money refers to the concept that money today is worth more than the same amount of money in the future due to inflation and the opportunity cost of not being able to invest it earlier. The future value of money is the expected value of an investment at a future time, calculated using a specific interest rate and compounding method.

Question 19

What is the compounding of interest?
A) The initial deposit
B) Money in a savings account
C) Interest found in a savings account
D) Interest on interest added to an initial deposit

Accepted Answer

Compounding of interest refers to the interest earned on interest that is added to an initial deposit. This means that the interest is increasing over time, rather than remaining flat like a simple interest account. Therefore, option D, "interest on interest added to an initial deposit" is the correct answer.

Question 20

The _________________ frequently interest is compounded,the _________________ the yield.
A) More; lower
B) More; higher
C) Less; higher
D) Less; same

Accepted Answer

When interest is compounded more frequently, the yield will be higher. This is because more frequent compounding allows the interest to earn interest more frequently, leading to a higher overall return. Conversely, less frequent compounding will result in a lower overall return. Therefore, Choice B is the correct answer.

Quiz 2: Time Value of Money

What gives paper currency value?

In which city are coins made?

Currently,which two U.S.cities produce coins for circulation?

Where is one place where paper money is printed?

What is compounding?

What gives money its value?

The annual percentage yield indicates:

What is paper money backed by?

Paper money is produced by the _________________.

If you have $3,000 today with a 10% APY,how much will you have one year from now?

Which of the following is paper money backed by?

What is the money in the United States backed by?

The process whereby the value of an investment increases exponentially over time is called the _________________.

Paper money is backed by the credit and faith of the U.S.government and _________________.

Who controls the circulation of money in the United States?

If you invest $100 and receive a 12% APR (annual percentage rate) ,what will your balance be at the end of the year?

What two cities are currently producing coins?

When interest is added to your initial deposit and you begin to earn interest on interest,this is known as

What is the compounding of interest?

The _ frequently interest is compounded,the _ the yield.