Question 1

People can write checks against

Accepted Answer

A)  demand deposits and money market mutual funds
B)  demand deposits but not money market mutual funds
C)  money market mutual funds but not demand deposits
D)  neither demand deposits nor money market mutual fundsE) B) and C)
F) None of the above

Question 2

Liquidity refers to

Accepted Answer

A)  the ease with which an asset is converted to the medium of exchange.
B)  the measurement of the intrinsic value of commodity money.
C)  the measurement of the durability of a good.
D)  how many time a dollar circulates in a given year.E) B) and D)
F) B) and C)

Question 3

When in France you notice that prices are posted in euros,this best illustrates money's function as

Accepted Answer

A)  a store of value.
B)  a medium of exchange.
C)  a unit of account.
D)  a method of barter.E) A) and B)
F) B) and C)

Question 4

In the United States,currency holdings per person average about

Accepted Answer

A)  $110;one explanation for this relatively small average is that many people use credit and debit cards to make transactions.
B)  $110;one explanation for this relatively small average is that U.S.citizens hold a lot of foreign currency.
C)  $4,490;one explanation for this relatively large amount is that criminals probably prefer currency as a medium of exchange.
D)  $4,490;one explanation for this relatively large average is that U.S.citizens hold a lot of foreign currency.E) None of the above
F) A) and D)

Question 5

The measure of the money stock called M1 includes

Accepted Answer

A)  wealth held by people in their checking accounts.
B)  wealth held by people in their savings accounts.
C)  wealth held by people in money market mutual funds.
D)  everything that is included in M2 plus some additional items.E) All of the above
F) None of the above

Question 6

Which of the following items is not included in the most narrow definition of money,M1?

Accepted Answer

A)  currency
B)  savings deposits
C)  traveler's checks
D)  demand depositsE) All of the above
F) A) and B)

Question 7

The set of items that serve as media of exchange clearly includes

Accepted Answer

A)  demand deposits.
B)  short-term bonds.
C)  credit cards.
D)  All of the above are correct.E) B) and D)
F) All of the above

Question 8

Mia puts money into a piggy bank so she can spend it later.What function of money does this illustrate?

Accepted Answer

A)  store of value
B)  medium of exchange
C)  unit of account
D)  None of the above is correct.E) A) and B)
F) A) and C)

Question 9

Which of the following is included in both M1 and M2?

Accepted Answer

A)  savings deposits
B)  demand deposits
C)  small time deposits
D)  money market mutual fundsE) C) and D)
F) A) and D)

Question 10

Economists use the word "money" to refer to

Accepted Answer

A)  income generated by the production of goods and services.
B)  those assets regularly used to buy goods and services.
C)  financial assets such as stocks and bonds.
D)  any type of wealth.E) A) and C)
F) A) and B)

Question 11

You receive money as payment for babysitting your neighbors' children.This best illustrates which function of money?

Accepted Answer

A)  medium of exchange
B)  unit of account
C)  store of value
D)  liquidityE) A) and C)
F) C) and D)

Question 12

Which list ranks assets from most to least liquid?

Accepted Answer

A)  currency,demand deposits,money market mutual funds
B)  currency,money market mutual funds,demand deposits
C)  money market mutual funds,demand deposits,currency
D)  demand deposits,money market mutual funds,currencyE) B) and C)
F) A) and D)

Question 13

Which of the following is not included in M1?

Accepted Answer

A)  a $5 bill in your wallet
B)  $100 in your checking account
C)  $500 in your savings account
D)  All of the above are included in M1.E) A) and B)
F) A) and C)

Question 14

One surprising thing about the U.S.money stock is that

Accepted Answer

A)  banks hold so much currency relative to the public.
B)  the public holds so much currency relative to banks.
C)  there is so little currency per person.
D)  there is so much currency per person.E) A) and B)
F) None of the above

Question 15

Given the following information,what are the

Accepted Answer

A)  M1 = $3,150 billion,M2 = $6,200 billion.
B)  M1 = $1,350 billion,M2 = $5,600 billion.
C)  M1 = $1,400 billion,M2 = $6,200 billion.
D)  M1 = $1,300 billion,M2 = $5,600 billion.E) All of the above
F) B) and C)

Question 16

If an economy uses silver as money,then that economy's money

Accepted Answer

A)  serves as a store of value but not as a medium of exchange.
B)  serves as a medium of exchange but not as a unit of account.
C)  is commodity money.
D)  has no intrinsic value.E) A) and B)
F) A) and C)

Question 17

Which of the following items is included in M2?

Accepted Answer

A)  credit cards
B)  money market mutual funds
C)  corporate bonds
D)  large time depositsE) None of the above
F) C) and D)

Question 18

Which of the following is a store of value?

Accepted Answer

A)  currency
B)  U.S.government bonds
C)  fine art
D)  All of the above are correct.E) A) and B)
F) A) and D)

Question 19

Which of the following is not included in M1?

Accepted Answer

A)  currency
B)  demand deposits
C)  savings deposits
D)  traveler's checksE) None of the above
F) B) and C)

Question 20

All U.S.paper dollars read "This note is legal tender for all debts,public and private." This statement represents which characteristic of US currency?

Accepted Answer

A)  The U.S.operates under the gold standard.
B)  U.S.paper money is commodity money.
C)  U.S.paper money is fiat money.
D)  U.S.paper money is a convenient store of wealth.E) None of the above
F) B) and C)

Exam 16: The Monetary System: The Meaning of Money

Which of the following is included in both M1 and M2?

Correct AnswerverifiedShow Answer

One surprising thing about the U.S.money stock is that

Correct AnswerverifiedShow Answer

When in France you notice that prices are posted in euros,this best illustrates money's function as

Correct AnswerverifiedShow Answer

Given the following information,what are the

Correct AnswerverifiedShow Answer

Which of the following is not included in M1?

Correct AnswerverifiedShow Answer

Which of the following items is included in M2?

Correct AnswerverifiedShow Answer

Liquidity refers to

Correct AnswerverifiedShow Answer

Which of the following is a store of value?

Correct AnswerverifiedShow Answer

In the United States,currency holdings per person average about

Correct AnswerverifiedShow Answer

Which of the following is not included in M1?

Correct AnswerverifiedShow Answer

The measure of the money stock called M1 includes

Correct AnswerverifiedShow Answer

If an economy uses silver as money,then that economy's money

Correct AnswerverifiedShow Answer

Mia puts money into a piggy bank so she can spend it later.What function of money does this illustrate?

Correct AnswerverifiedShow Answer

Economists use the word "money" to refer to

Correct AnswerverifiedShow Answer

Which of the following items is not included in the most narrow definition of money,M1?

Correct AnswerverifiedShow Answer

All U.S.paper dollars read "This note is legal tender for all debts,public and private." This statement represents which characteristic of US currency?

Correct AnswerverifiedShow Answer

The set of items that serve as media of exchange clearly includes

Correct AnswerverifiedShow Answer

You receive money as payment for babysitting your neighbors' children.This best illustrates which function of money?

Correct AnswerverifiedShow Answer

Which list ranks assets from most to least liquid?

Correct AnswerverifiedShow Answer

People can write checks against

Correct AnswerverifiedShow Answer

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