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Your score is: 30
 
Positive Money Can be Contacted on their Web Site http://positivemoney.org/2014/08/7-10-mps-dont-know-creates-money-uk/
 
 
 
This Quiz Was 

Written and developed by David Faraday

Created online Interactively By Roger Lewis https://letthemconfectsweeterlies.blogspot.se/

 

Finace and Money Wizard
90%Plus, thats very Good indeed
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the Positive Money quiz Written and developed by David Faraday

30/33

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Question 6
Comment: Only 3% of the money in the UK economy, the £67bn, is actually cash. That means that the total amount of money in the UK economy to be about £2.2tn, with more than £2.1tn of this being numbers if computers. See VIDEO: Banking 101, part 3 http://www.positivemoney.org/how-money-works/banking-101-video-course/how-is-money-reallymade- by-banks-banking-101-part-3/
100% Match
Question 2
Comment: Goldsmiths promissory notes become recognised as legal tender through the Promissory Notes Act of 1704. See BOOK: Where Does Money Come From? https://www.positivemoney.org/where-does-money-come-from/
100% Match
Question 5
Comment: In 2006, for example, seiniorage was worth almost £5bn to the UK government. See POSTIVE MONEY WEB-SITE http://www.positivemoney.org/2011/03/seigneurage-foregone-by-the-uk-in-2006/
100% Match
Question 7
Comment: In 2001 the total amount of money in the UK economy was about £1tn, by 2009 this had expanded to more than £2tn.
100% Match
Question 8
Comment: As we will discover later in this quiz, it’s actually commercial banks that have created most of this money and not, as many people think, the government or the Bank of England.
100% Match
Question 9
Comment: In the process of Quantitative Easing, the Bank of England buys Government Bonds from the financial markets. This essentially injects money into those markets and, in principle, some of this money should then trickle down into the ‘real’ non-financial economy. See VIDEO: How to waste £375bn http://www.positivemoney.org/videos/introduction/waste-375-billion-failure-quantitative-easing-video/ See POSTIVE MONEY WEB-SITE http://www.positivemoney.org/how-money-works/advanced/how-quantitative-easing-works/
100% Match
Question 10
Comment: Only 8% of all the money generated through Quantitative Easing, that’s about £30bn, is estimated to have reached the ‘real’ economy. Meanwhile, the value of shares on the stock market increased by 20%. See VIDEO: How to waste £375bn http://www.positivemoney.org/videos/introduction/waste-375-billion-failure-quantitative-easing-video/
100% Match
Question 11
Comment: If the money from Quantitative Easing was spent into the ‘real’ economy, through public projects such as building schools or hospitals, it would get to real people through wages and then this would be spent again by those people benefitting others. It is estimated that this compounding effect would grow the economy by £2.80 for every £1 of money spent through QE. See VIDEO: How to waste £375bn http://www.positivemoney.org/videos/introduction/waste-375-billion-failure-quantitative-easing-video/
100% Match
Question 12
Comment: It’s quite illuminating how many people believe that banks simply act as storehouse for money. See VIDEO: Banking 101, part 1 http://www.positivemoney.org/how-money-works/banking-101-video-course/misconceptions-aroundbanking- banking-101-part-1/
100% Match
Question 13
Comment: Once you hand over your cash to the bank it’s not yours anymore it’s the banks. As such, they can pretty much do what they please with it. However, you do get something in return. The bank is obliged to give you a piece of paper, or a statement, which tells you how much they owe you. And, depending on the type of account you have, they are also be obliged to return that money to you, either on demand or possibly after some agreed period of time. See VIDEO: Banking 101, part 1 http://www.positivemoney.org/how-money-works/banking-101-video-course/misconceptions-aroundbanking- banking-101-part-1/
100% Match
Question 14
Comment: Your bank statement will tell you that you have a deposit account and the amount that’s in it, you would clearly regard this as an asset. However, the bankers look at things a little differently. They may now own your money, but they also know that they have promised to pay you back the money in that deposit account at some point in the future, so they refer to it as a ‘Liability’.See VIDEO: Banking 101, Part 3 http://www.positivemoney.org/how-money-works/banking-101-video-course/how-is-money-reallymade- by-banks-banking-101-part-3/
100% Match
Question 15
Comment: If you take out a loan, you’ll be given a statement telling you how much you owe. The banks see this as an asset because, even though they don’t have the cash in a vault anymore, they do know that they should get this money back at some point in the future. See VIDEO: Banking 101, Part 3 http://www.positivemoney.org/how-money-works/banking-101-video-course/how-is-money-reallymade- by-banks-banking-101-part-3/
100% Match
Question 16
Comment: Many textbooks still describe money creation and banking with this model, as do widely accessed public sources such as Wikipedia. Interestingly, Wikipedia has recently seen a dispute between editors of the money multiplier and fractional reserve pages and those who wish to update these pages to reflect how the system really works. However, Wikipedia’s view is that their entries should reflect the ‘text-book’ thinking of a principle – right or wrong -, rather than the most up-to-date thinking. So the description of the system using the money multiplier model remains on Wikipedia. See DISPUTE http://www.fractionalreserves.com/wiki_dispute.htm See VIDEO: Banking 101, part 2 http://www.positivemoney.org/how-money-works/banking-101-video-course/whats-wrong-with-themoney- multiplier-model-banking-101-part-2/
100% Match
Question 17
Comment: There is no legal reserve ratio or fixed amount of deposits that a bank has to hold in order to make loans. It’s for the banks themselves to determine what reserves they should hold in order to remain solvent. See VIDEO: Banking 101, Part 3 http://www.positivemoney.org/how-money-works/banking-101-video-course/how-is-money-really-madeby- banks-banking-101-part-3/ See VIDEO: Banking 101, Part 4 http://www.positivemoney.org/how-money-works/banking-101-video-course/how-much-money-can-bankscreate- banking-101-part-4/
100% Match
Question 18
Comment: Money created from nothing, this does sound like magic, possibly even fraud, but this is how the system works. When you take out a loan from the bank, no one checks to see if there’s enough money in the vault - even the ‘electronic’ vault – someone simply types the numbers into your deposit account and you then have access to the money; they also type the same number into a loan account and you get a statement of how much you owe. To be fair, sometimes they also do check if you are likely to be able to repay the loan as well! See VIDEO: Banking 101, Part 3 http://www.positivemoney.org/how-money-works/banking-101-video-course/how-is-money-really-madeby- banks-banking-101-part-3/ See POSTIVE MONEY WEB-SITE http://www.positivemoney.org/how-money-works/advanced/introduction-to-balance-sheets/
100% Match
Question 19
Comment: It might be argued (and is) that the money created in deposit accounts, as a result of taking out a loan, doesn’t really exist; it’s just some credit and it’s cancelled out by it’s equivalent liability - basically it’s just an artifact of the accounting method used. However, this argument is somewhat undermined if it can be demonstrated that this money can be used in the same way as cash. Even the Bank of England agrees that this credit is effectively new money in the economy, see the Bank of England’s Quarterly Bulletin for Q1 this year. See VIDEO: Banking 101, Part 3 http://www.positivemoney.org/how-money-works/banking-101-video-course/how-is-money-really-made-bybanks- banking-101-part-3/ See VIDEO: Banking 101, Part 5 http://www.positivemoney.org/how-money-works/banking-101-video-course/do-banks-create-money-orjust- credit-banking-101-part-5/ See DOCUMENT: Bank of England Quarterly Bulletin, 2014 Q1 http://www.bankofengland.co.uk/publications/Documents/quarterlybulletin/2014/ qb14q1prereleasemoneyintro.pdf http://www.bankofengland.co.uk/publications/Documents/quarterlybulletin/2014 qb14q1prereleasemoneycreation.pdf
100% Match
Question 20
Comment: Not only didn’t they have the money to lend in the first place, they charge you interest for the privilege of giving it to you! See VIDEO: Banking 101, Part 3 http://www.positivemoney.org/how-money-works/banking-101-video-course/how-is-money-really-madeby- banks-banking-101-part-3/
100% Match
Question 21
Comment: The government has never formally given this power to commercial banks and officially the government does not even recognise that commercial banks effectively have this power. However, recent briefing documents from the Bank of England do go some way to recognising this reality. See DOCUMENT: Money creation in the modern economy (BoE Publication) http://www.bankofengland.co.uk/publications/Documents/quarterlybulletin/2014/ qb14q1prereleasemoneycreation.pdf
100% Match
Question 22
Comment: when a loan is fully re-paid the asset value of that loan to the bank disappears along with its associated liability. Of course, this isn’t an instantaneous process, this happens slowly over time. As you repay the loan this simultaneously reduces the size of the liability and value of the asset until both disappear. See VIDEO: Banking 101, Part 6 http://www.positivemoney.org/how-money-works/banking-101-video-course/how-money-gets-destroyedbanking- 101-part-6/
100% Match
Question 23
Comment: Well almost, it increased by 370%, while house prices increased by 200%. These increases are often attributed to factors such as too many people wanting to buy in certain areas, too much immigration and too few new houses being built? But, to put this into perspective, over same period for every four new people, three new homes were actually built. See VIDEO: Why Are They So High http://www.positivemoney.org/issues/house-prices/
100% Match
Question 24
Comment: And in London the rise was from 22.2% to 66.6%. See POSTIVE MONEY WEB-SITE http://www.positivemoney.org/issues/house-prices/
100% Match
Question 26
Comment: The vast majority of MPs don’t understand that commercial banks also have the ability to effectively create money through the issuing of debt. Only one in five MPs knew that this statement was false. See POSTIVE MONEY WEB-SITE http://www.positivemoney.org/2014/08/7-10-mps-dont-know-creates-money-uk/
100% Match
Question 27
Comment: These board members are not directly accountable to parliament, they have not been elected by popular vote and they are certainly not a representative cross-section of the British population. They are accountable to the bank’s share-holders, the vast majority of whom simply want the bank to make as much money as possible. See VIDEO: The Power of Banks vs Democracy http://www.positivemoney.org/issues/democracy/
100% Match
Question 28
Comment: Even when we exclude property from the numbers, which accounts for 51% of the money created, less than one-fifth of the remaining money that is created gets into the real economy. This means that the vast majority of the money in the UK economy is either trapped in property or used for speculation in the financial markets. See POSTIVE MONEY WEB-SITE http://www.positivemoney.org/issues/recessions-crisis/ http://www.positivemoney.org/issues/jobs-business/
100% Match
Question 29
Comment: This will increase as the national debt continues to rise. Because, although the current government have reduced the deficit, this simply means that the rate at which the national debt is going up is now less, but it’s still going up. The government still spends more than in collects in taxes – if only the government had collected the £1tn in Seiniorage for all the money created in the 8 years before the financial crisis! See POSTIVE MONEY WEB-SITE http://www.positivemoney.org/issues/taxes/
100% Match
Question 1
Comment: There is historical evidence that indicates that banking preceded coined money by a number of thousands of years. Interesting, there is also evidence to suggest that the written word owes it origins to the need to keep accounts. See BOOK: Where Does Money Come From? https://www.positivemoney.org/where-does-money-come-from/
0% Match
Question 3
Comment: By the mid-19th Century the issuing of promissory or bank notes was getting out of hand. Banks were failing because they were issuing many more promissory notes than they had the gold to back them up; banks were failing. The government stepped in and passed a law that prohibited commercial banks from creating money through issuing bank notes. Currently in the UK, the Bank of England issues all bank notes for England and Wales. Seven retail banks, three in Scotland and four in Northern Ireland also issue bank notes, but this is regulated by the Bank of England. See POSTIVE MONEY WEB-SITE http://www.positivemoney.org/how-money-works/how-did-we-end-up-here/
0% Match
Question 4
Comment: However, that’s only around £1,000 worth of bank notes or coins for each member of the population, it doesn’t sound enough does it? See POSTIVE MONEY WEB-SITE https://www.positivemoney.org/how-money-works/how-much-money-have-banks-created/
0% Match
Question 25
Comment: In essence, this means there is a steady redistribution of wealth from the poorest people in the population to the richest. Mid-income people pay around 3.5% of their income in interest. See VIDEO: Why are the rich getting richer http://www.positivemoney.org/issues/inequality/ See DOCUMENT: Banking, Finance and Income Inequality https://www.positivemoney.org/wp-content/uploads/2013/10/Banking-Finance-and-Income-Inequality.pdf
0% Match
Outcomes
Finace and Money Wizard
7%
 
You Know your Onions
16%
 
You Are Awake
62%
 
Count your fingers if you shake Hands with the Bank Manager
15%
 
Question 1
30%
 
Question 2
64%
 
Question 3
2%
 
Question 4
1%
 
Question 5
3%
 
Question 6
1%
 
Question 7
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Question 8
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Question 9
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Question 10
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Question 11
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Question 12
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Question 13
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Question 14
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Question 15
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Question 16
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Question 17
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Question 18
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Question 19
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Question 20
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Question 22
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Question 23
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Question 24
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Question 25
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Question 26
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Question 27
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Question 28
0%
 
Question 29
0%
 
Goldsmiths, or early bankers, started issuing promissory notes for the gold or silver they stored as early as 1633. But how many decades passed before these actually become recognised as legal tender?
7 Years
0%
 
7 Decades
100%
 
Like the chicken and the egg, which came first banking or money?
Money
40%
 
Banking
60%
 
In which year were independent or commercial banks legally stopped from printing their own bank notes?
1814
0%
 
1844
20%
 
1874
40%
 
1904
40%
 
The population of the UK is around 64m, approximately how much cash (bank notes and coins created by the Bank of England) is currently in circulation in the UK economy?
£670m
20%
 
£6.7bn
60%
 
£67bn
0%
 
£670bn
20%
 
When bank notes and coins are manufactured the government, via the Bank of England, essentially sells them to commercial banks at face value. This income, after manufacturing and distribution costs, is called:
Seiniorage
80%
 
Dividend
20%
 
Tobin Tax
0%
 
Interest
0%
 
In our digital age, of course, we don’t always use cash. Often we use electronic money, through debit and credit cards or through standing orders and direct debits from our bank accounts. So what proportion of the total money in our economy do bank notes and coins actually make-up?
3%
80%
 
37%
20%
 
63%
0%
 
97%
0%
 
It took 300 years to create the first trillion pounds, how long did it take to create the second trillion?
8 months
0%
 
8 years
80%
 
80 years
20%
 
160 years
0%
 
Who created most of this money?
The Government
20%
 
Working People
0%
 
The Commercial Banks
60%
 
The Bank of England
20%
 
The electronic money that the Bank of England creates is known as Central Bank Reserves; it’s this money that commercial banks exchange between themselves to settle their accounts. Since the financial crisis the Bank of England has created more Central Bank Reserves through a process known as Quantitative Easing, but how much have they created?
£3.75bn
0%
 
£37.5bn
20%
 
£375bn
60%
 
£3.75tn
20%
 
For every pound created through Quantitative Easing, how much does Positive Money estimate has actually reached the ‘real’ economy?
68p
20%
 
32p
0%
 
8p
40%
 
5p
40%
 
If the money generated through Quantitative Easing was spent directly into the ‘real’ economy, for every pound spent how much does Positive Money estimate the economy would grow by?
28p
0%
 
£1.80
20%
 
£2.80
80%
 
£11.80
0%
 
What proportion of the adult population in the UK believes that banks simply ‘hold on to any money deposited with them’, like a commercial ‘piggy bank’?
One tenth
0%
 
One fifth
0%
 
One quarter
0%
 
One third
100%
 
When you deposit some of your own money into a bank account, maybe your saving for holiday or simply keeping your money safe, who then legally owns that money?
You
0%
 
The Bank
100%
 
What term do bankers use to describe any deposits you might have with them?
Assets
40%
 
Debts
0%
 
Liabilities
60%
 
Credits
0%
 
Most of the remaining members of the public believe that banks actually loan out any money that’s deposited with them to other people or businesses. What term do bankers use to describe the loans that they make?
Assets
80%
 
Debts
0%
 
Liabilities
0%
 
Credits
20%
 
Economics students, and most other financially trained people, understand things slightly differently. They have been taught the money multiplier, or fractional reserve, model of banking. However, even though this model is still widely taught, it’s not quite how the system works. Professor Charles Goodhart of the LSE, an adviser to the BoE, described this model as “such an incomplete way of describing the process of the determination of the stock of money that it amount to mis-instruction”. When do you think he said this?
2014
20%
 
2004
0%
 
1994
40%
 
1984
40%
 
To make a loan of £100,000, legally how much money does a bank need to have on deposit or keep in reserve?
£100,000
0%
 
£50,000
0%
 
£10,000
0%
 
Nothing
100%
 
When you take out a loan the bank simply creates a balance sheet, on one side they put the amount you’ve borrowed, which you see as your loan account or your repayment schedule, and on the other side they put the amount they’ve given to you, which you see as money in your deposit account. What is this process called?
Magic
0%
 
Double entry accounting
100%
 
Fraud
0%
 
Good practice
0%
 
You borrow £100 from a bank, but you’re not sure it’s real money because you now know a little about where it’s come from, what’s the simplest method of testing out whether it’s real or not?
Borrow it down the Pub
0%
 
Withdraw it from a cash machine
100%
 
How do the banks make any money through this process?
Bank Charges
0%
 
Charging Interest
100%
 
When was the legislation passed that gave the commercial banks the power to create money through issuing debt in the form of loans?
1066
0%
 
1666
0%
 
1776
0%
 
There has never been any law passed
100%
 
When the loan is repaid, what happens to the money?
It is Re-Loaned
20%
 
The Government Takes it back
20%
 
It Is Destroyed
60%
 
It Goes to the Tooth fairy
0%
 
Over the ten years prior to the financial crisis by how much did mortgage lending increase?
Two times
0%
 
Three times
0%
 
Four times
20%
 
Five times
80%
 
In 1996, on average a first time buyer would spend 17.5% of their take home salary on their mortgage. What percentage of a first time buyer’s take home salary was required by 2008?
9.3%
0%
 
29.3%
20%
 
49.3%
60%
 
69.3%
20%
 
On average, the richest 10% of the population pay 1.4% of their income to the banks in interest. How much do the poorest 10% pay?
1.4%
0%
 
6.4%
0%
 
9.4%
0%
 
18.4%
100%
 
In a recent Positive Money poll of 100 MPs, what percentage said that the following statement was true: “Only the government – via the Bank of England or Royal Mint – has the authority to create money, including coins, notes and the electronic money in your bank account.”?
91%
40%
 
71%
60%
 
51%
0%
 
31%
0%
 
Between 2003 and 2008, 646 MPs elected by more than 24m voters, oversaw government spending of £2.1tn. Over the same period the five largest UK banks created £2.9tn through issuing debt. The key decisions about how much debt to issue are taken by the board members of these banks. How many of them were there?
780
0%
 
156
20%
 
78
40%
 
16
40%
 
Excluding property, what proportion of the money that banks created do you think Positive Money have estimated actually went into businesses outside the financial sector, what commentators often refer to as the ‘real’ economy?
64%
0%
 
32%
0%
 
16%
40%
 
8%
60%
 
In 2013, who said: “The financial crisis of 2007 to 2008 occurred because we failed to constrain the financial system’s creation of private credit and money.”
Gordon Brown (former PM and Chancellor);
0%
 
Lord Adair Turner (former Chair of the Financial Services Authority);
60%
 
George Osbourne (the last but one Chancellor);
0%
 
Mark Carney (the current Governor of the Bank of England)
40%
 
Is it possible to take the power to create money away from the commercial banks?
Yes
100%
 
No
0%
 
Who do think that Positive Money recommends to be given the power to create money?
The Prime Minister
0%
 
Parliament
20%
 
An independent committee
80%
 
Russell Brand, campaigning comedian
0%
 
Is it possible to create the necessary legislation to have debt-free money?
Yes
100%
 
No
0%
 
The UK population pay £192m in interest everyday to the banks, how much have we had to pay since the start of this quiz?
£12m
20%
 
£2m
20%
 
£4m
40%
 
£8m
20%
 
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