This is a good question,* because it highlights a common misconception that many Jews in the diaspora (and non-Jews, come to that) have about Israelis.
With the exception of old-timers from Eastern Europe and the Ashkenazi ultra-Orthodox communities (who regard Hebrew as being suited for prayer and religious study rather than for everyday conversation), the vast majority of Israelis do not understand Yiddish, nor use Yiddish terms.
(My answer to this question at Quora.com)
Yiddish is being passed down to the younger generation only among the Ashkenasi ultra-Orthodox Jews (in Israel and in the U.S.—mainly Brooklyn). They do so because they consider Hebrew a sacred language to be used only for the study of Scripture, and not for the profane needs of everyday life.
Everywhere else Yiddish has pretty much died out.
Actually, yes. Broadly speaking, there were two types of Jews living in Eretz-Israel in the nineteenth century before the first Zionists arrived: small Ashkenazi Orthodox kollelim (communities supported by donations from their communities of origin abroad), and Sephardi Jews who were the descendants of Spanish Jews who had reached the Holy Land, directly or indirectly, after the expulsion of the Jews from Spain and Portugal in the 1490s.