How can I test the NFC capability of my Android? I got a Nexus 7 last week, and I love it! It has NFC functionality, and I was wondering how I could test it?

I don't actually have any NFC tags that I can use (have you seen the price of them?!?).

So, how can I test NFC without NFC tags?
The only solution for you is to use another NFC enabled device. Turn on Android Beam and try to beam something to the other device and vice versa. You can find how to use android beam here. 

You cannot use apps to check it as they are only capable of checking whether NFC is turned on or not. Also the service menu tests is of no use without a tag. 

And by the way, NFC tags are not that expensive. Try eBay and nfctagstore.com