MegaMaester

Finance · Module 4

How Money Works

The first three modules were about your money — budgeting, investing, and everyday decisions. This module zooms out to the system that money lives in: what money actually is, and how banks, central banks, markets, and the global economy fit together.

You will learn what gives money its value, how banks create money by lending, what central banks do, how financial markets set prices, how digital money and cryptocurrencies work, how the global financial system connects, and how money keeps changing.

This module is educational and descriptive. It is not financial or investment advice, and every figure is illustrative.

Lessons
7 lessons
Estimated time
~6-8 hours
Assessment
Module quiz included

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Lessons

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How Money Works — Module Assessment

14 questions · pass mark 75%

  1. 1.Which set correctly lists the three classic functions of money?
  2. 2.What best describes fiat money?
  3. 3.In a modern economy, how is most money created?
  4. 4.What is maturity transformation, and why does it create risk?
  5. 5.Which best describes the primary tool a central bank uses to influence the economy?
  6. 6.What is meant by monetary policy trying to 'smooth the business cycle'?
  7. 7.In price discovery on an exchange, how is the current price of a share determined?
  8. 8.Which statement correctly distinguishes the primary from the secondary market?
  9. 9.Which statement best describes a blockchain as used by a typical cryptocurrency?
  10. 10.Why is the irreversibility of most cryptocurrency transactions described as both a feature and a risk?
  11. 11.What does an exchange rate represent?
  12. 12.Which best explains why financial crises can spread across borders?
  13. 13.Which statement best describes a central bank digital currency (CBDC)?
  14. 14.According to the lesson, why is relying on a single payment method a form of fragility?
Answer every question to submit.