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100+ Free DSST Money and Banking Practice Questions

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Suppose reserve requirements are 10%, banks hold no excess reserves, and the public holds no additional currency. A $1,000 increase in reserves could support at most how much new deposits in the simple multiplier model?

A
B
C
D
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Key Facts: DSST Money and Banking Exam

100

official exam questions

GetCollegeCredit DSST Money and Banking Fact Sheet

2 hours

official time limit

GetCollegeCredit DSST Money and Banking Fact Sheet

400

minimum recommended score

GetCollegeCredit exam page and fact sheet

3

upper-level baccalaureate semester hours

GetCollegeCredit DSST Money and Banking Fact Sheet

$100

DSST test fee before site administrative fees

GetCollegeCredit DSST Questions and Answers

63%

FY24 DANTES military pass rate

DANTES FY24 DSST Exams by Military Pass Rates

DSST Money and Banking is a current Prometric DSST Business exam. The official GetCollegeCredit page lists form codes SQ548, SR548, SY548, and SZ548, 3 semester hours, and a minimum score of 400. The official fact sheet states that the exam has 100 questions in 2 hours and recommends 3 upper-level baccalaureate semester hours. The largest blueprint section is Commercial Banks and Other Financial Intermediaries at 25%, followed by Central Banking and the Federal Reserve System at 21%, Monetary Policy in the United States at 20%, Money and Macroeconomic Activity at 19%, the International Monetary System at 10%, and the Role and Kinds of Money at 5%.

Sample DSST Money and Banking Practice Questions

Try these sample questions to test your DSST Money and Banking exam readiness. Each question includes a detailed explanation. Start the interactive quiz above for the full 100+ question experience with AI tutoring.

1Which item best illustrates money serving as a medium of exchange?
A.A shopper uses a debit card balance to buy groceries.
B.A collector keeps rare coins because they may rise in value.
C.A store lists every price in dollars.
D.A family compares the value of a house with the value of a car.
Explanation: Money acts as a medium of exchange when it is generally accepted in payment for goods and services. The debit card transaction uses a deposit balance to complete a purchase, so it replaces barter with a widely accepted payment instrument.
2A restaurant menu lists a sandwich at $12 and soup at $7. Which function of money is being used?
A.Unit of account
B.Lender of last resort
C.Open-market operation
D.Fractional reserve asset
Explanation: A unit of account provides a common measure for quoting and comparing prices. The menu uses dollars to express relative values, even before any payment is made.
3Which statement best distinguishes fiat money from commodity money?
A.Fiat money has value mainly because government declares it legal tender and people accept it, while commodity money has value from the item itself.
B.Fiat money must be redeemable for gold, while commodity money cannot be traded.
C.Fiat money is always electronic, while commodity money is always paper currency.
D.Fiat money can serve only as a unit of account, while commodity money can serve only as a store of value.
Explanation: Fiat money is not backed by a claim to a commodity at a fixed conversion rate; it circulates because of legal status, public confidence, and general acceptability. Commodity money, such as gold or silver coins, has nonmonetary value as a good.
4Why are checking deposits usually considered money while corporate bonds usually are not?
A.Checking deposits can be spent directly, while corporate bonds generally must be sold or redeemed before being used for payment.
B.Checking deposits always pay higher interest than bonds.
C.Corporate bonds are issued only by the Federal Reserve.
D.Checking deposits are never liabilities of banks.
Explanation: Money definitions emphasize liquidity and direct usability in transactions. Checking deposits are transferable by check, debit card, or electronic payment, whereas corporate bonds are financial assets that usually need conversion into spendable funds.
5A country with very high inflation finds that households rush to spend paychecks immediately because cash loses purchasing power quickly. Which function of money is most directly weakened?
A.Store of value
B.Reserve requirement
C.Discount lending
D.Balance of payments accounting
Explanation: Money is a store of value when it preserves purchasing power over time. High inflation erodes that purchasing power, so people try to avoid holding money balances and may substitute goods, foreign currency, or other assets.
6On a commercial bank balance sheet, which item is typically an asset of the bank?
A.Loans made to customers
B.Demand deposits owed to customers
C.Shareholders' equity only
D.Unpaid checks written by depositors
Explanation: Loans are assets because they are claims on borrowers that generate interest income and future repayment. Deposits are liabilities because the bank owes those funds to depositors on the agreed terms.
7What is the primary economic role of a financial intermediary?
A.Channel funds from savers to borrowers while helping manage information, liquidity, and risk.
B.Set all tax rates for the federal government.
C.Guarantee that every investment earns a positive return.
D.Replace the need for money in all transactions.
Explanation: Financial intermediaries connect surplus units that save with deficit units that need financing. Banks, credit unions, insurance companies, pension funds, and mutual funds also screen borrowers, diversify risk, transform maturities, and provide liquidity services.
8A bank funds long-term mortgages with short-term deposits that customers can withdraw on demand. What kind of transformation is the bank performing?
A.Maturity transformation
B.Currency sterilization
C.Purchasing power parity
D.Fiscal automatic stabilization
Explanation: Maturity transformation means using short-maturity liabilities to fund longer-maturity assets. It supports lending and liquidity provision, but it also exposes banks to liquidity risk if many depositors demand funds at once.
9Which action would most directly improve a bank's capital ratio?
A.Issuing common stock and retaining the proceeds as equity capital
B.Replacing a fixed-rate mortgage with another loan of identical risk and amount
C.Increasing uninsured deposits while assets stay unchanged
D.Paying a large cash dividend when profits are weak
Explanation: A capital ratio compares bank capital to assets or risk-weighted assets. Issuing stock increases equity capital and can strengthen the buffer available to absorb losses.
10What is the main purpose of FDIC deposit insurance in the United States?
A.Protect insured depositors up to legal limits and reduce the incentive for bank runs.
B.Guarantee bank shareholders against stock losses.
C.Set the federal funds target range at each meeting.
D.Approve every commercial loan before it is made.
Explanation: Deposit insurance protects covered depositors when an insured bank fails, subject to coverage limits. By reassuring depositors, it reduces the incentive to withdraw funds simply because others might do so.

About the DSST Money and Banking Exam

Money and Banking is a DSST upper-level baccalaureate credit-by-exam covering the role and kinds of money, commercial banks and financial intermediaries, macroeconomic activity, central banking and the Federal Reserve System, U.S. monetary policy, and the international monetary system.

Assessment

100 multiple-choice questions covering six official content areas.

Time Limit

2 hours

Passing Score

400 minimum recommended score

Exam Fee

$100 DSST test fee; testing-site administrative fees may vary (Prometric DSST; DANTES funding is available for eligible military test takers)

DSST Money and Banking Exam Content Outline

5%

The Role and Kinds of Money

Alternative definitions of money and the relationship between money and other assets.

25%

Commercial Banks and Other Financial Intermediaries

Bank regulation, banking-industry structure, operation and management of financial markets and intermediaries, and deposit insurance.

19%

Money and Macroeconomic Activity

Basic classical and Keynesian economics, monetarism and rational expectations, money and inflation, velocity, GDP, and real money balances.

21%

Central Banking and the Federal Reserve System

Historical and philosophical framework, Federal Reserve structure and organization, current monetary management, reserves, open-market operations, and lender-of-last-resort functions.

20%

Monetary Policy in the United States

Policy effectiveness, conducting monetary policy, interest rates and the money supply, monetary versus fiscal policy, policy lags, inflation targeting, and historical U.S. financial crises.

10%

The International Monetary System

International banking, international monetary institutions and debt crises, international payments and exchange rates, and monetary policy in conjunction with exchange rates.

How to Pass the DSST Money and Banking Exam

What You Need to Know

  • Passing score: 400 minimum recommended score
  • Assessment: 100 multiple-choice questions covering six official content areas.
  • Time limit: 2 hours
  • Exam fee: $100 DSST test fee; testing-site administrative fees may vary

Keys to Passing

  • Complete 500+ practice questions
  • Score 80%+ consistently before scheduling
  • Focus on highest-weighted sections
  • Use our AI tutor for tough concepts

DSST Money and Banking Study Tips from Top Performers

1Use the official DSST fact sheet as the checklist and divide study time by the published 5%, 25%, 19%, 21%, 20%, and 10% weights.
2Know the classic functions of money and how liquidity distinguishes money from other financial assets.
3Practice bank balance-sheet questions involving assets, liabilities, reserves, capital, liquidity risk, deposit insurance, and credit risk.
4Connect money growth, velocity, real output, inflation, expectations, and interest rates using the quantity equation and Keynesian liquidity preference.
5Review the Federal Reserve's structure, open-market operations, federal funds market, discount lending, reserve balances, and current monetary-management tools.
6Compare monetary and fiscal policy, including policy lags, transmission channels, inflation targeting, financial crises, and the limits of policy effectiveness.
7Do timed practice sets so you are comfortable answering 100 multiple-choice questions in 2 hours.

Frequently Asked Questions

Is DSST Money and Banking a current public DSST exam?

Yes. GetCollegeCredit has a current individual exam page for Money and Banking in the Business category, and DANTES lists Money and Banking among DSST Business exam subjects.

How many questions are on DSST Money and Banking?

The official DSST Money and Banking fact sheet states that the exam contains 100 questions to be answered in 2 hours.

What score is recommended for credit?

The GetCollegeCredit exam page and official fact sheet list a minimum recommended score of 400 for 3 semester hours. Colleges decide their own credit-award policies, so confirm requirements with your institution.

How much does DSST Money and Banking cost?

The DSST Questions and Answers page lists a $100 test fee per exam and notes that this does not include any administrative costs the testing site may require. Eligible DANTES-funded military first attempts may be funded.

What topics are covered?

The official fact sheet lists six weighted areas: the role and kinds of money; commercial banks and other financial intermediaries; money and macroeconomic activity; central banking and the Federal Reserve System; U.S. monetary policy; and the international monetary system.

Can this DSST exam be taken online?

Prometric and DANTES describe remote proctoring for DSST exams and identify Principles of Public Speaking as the remote-delivery exception. Confirm current delivery options during scheduling.