Question 1

Which of the following is not included in the measure of M1?

Accepted Answer

A)  NOW accounts.
B)  Demand deposits.
C)  Currency.
D)  Savings deposits.E) A) and C)
F) None of the above

Question 2

Increasing transactions costs of selling an asset make the asset

Accepted Answer

A)  more valuable.
B)  more liquid.
C)  less liquid.
D)  more moneylike.E) B) and C)
F) A) and D)

Question 3

Which of the following is included in M2 but not in M1?

Accepted Answer

A)  NOW accounts
B)  Demand deposits
C)  Currency
D)  Money market mutual fund shares (retail) E) A) and B)
F) A) and C)

Question 4

In explaining the evolution of money

Accepted Answer

A)  government regulation is the most important factor.
B)  commodity money,because it is valued more highly,tends to drive out paper money.
C)  new forms of money evolve to lower transaction costs.
D)  paper money is always backed by gold and therefore more desirable than checks.E) A) and B)
F) C) and D)

Question 5

What factors have slowed down the movement to a system where all payments are made electronically?

Accepted Answer

The equipment necessary to set up the sy...

Question 6

All of the following are necessary criteria for a commodity to function as money except

Accepted Answer

A)  it must deteriorate quickly.
B)  it must be divisible.
C)  it must be easy to carry.
D)  it must be widely accepted.E) All of the above
F) B) and D)

Question 7

A problem with barter exchange when there are many goods is that in a barter system

Accepted Answer

A)  transactions costs are minimized.
B)  there exists a multiple number of prices for each good.
C)  there is only one store of value.
D)  exchange of services is impossible.E) None of the above
F) A) and B)

Question 8

A fall in the level of prices

Accepted Answer

A)  does not affect the value of money.
B)  has an uncertain effect on the value of money.
C)  increases the value of money.
D)  reduces the value of money.E) A) and B)
F) None of the above C

Question 9

________ is the narrowest monetary aggregate that the Fed reports.

Accepted Answer

A)  M0
B)  M1
C)  M2
D)  M3E) All of the above
F) A) and C)

Question 10

Which of the following is a true statement?

Accepted Answer

A)  Money and income are flow variables.
B)  Money is a flow variable.
C)  Income is a flow variable.
D)  Money and income are stock variables.E) A) and D)
F) All of the above

Question 11

Of the following assets,the least liquid is

Accepted Answer

A)  stocks.
B)  traveler's checks.
C)  checking deposits.
D)  a house.E) B) and C)
F) B) and D)

Question 12

Which of the following is not a form of e-money?

Accepted Answer

A)  a debit card
B)  a credit card
C)  a stored-value card
D)  a smart cardE) A) and D)
F) B) and C)

Question 13

The payments system is

Accepted Answer

A)  the method of conducting transactions in the economy.
B)  used by union officials to set salary caps.
C)  an illegal method of rewarding contracts.
D)  used by your employer to determine salary increases.E) None of the above
F) C) and D)

Question 14

A person's house is part of her

Accepted Answer

A)  money.
B)  income.
C)  liabilities.
D)  wealth.E) A) and C)
F) All of the above

Question 15

Patrick places his pocket change into his savings bank on his desk each evening.By his actions,Patrick indicates that he believes that money is a

Accepted Answer

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

Question 16

Compared to an electronic payments system,a payments system based on checks has the major drawback that

Accepted Answer

A)  checks are less costly to process.
B)  checks take longer to process,meaning that it may take several days before the depositor can get her cash.
C)  fraud may be more difficult to commit when paper receipts are eliminated.
D)  legal liability is more clearly defined.E) A) and C)
F) A) and B)

Question 17

Which of the following is not included in the M1 measure of money but is included in the M2 measure of money?

Accepted Answer

A)  Currency
B)  Traveler's checks
C)  Demand deposits
D)  Small-denomination time depositsE) A) and B)
F) A) and D) D

Question 18

Explain how cigarettes could be called "money" in prisoner-of-war camps of World War II.

Accepted Answer

The cigarettes performed the three funct...

Question 19

The Fed estimates initial monetary aggregate reports because ________ depository institutions report the amount of their deposits infrequently.

Accepted Answer

A)  all
B)  small
C)  large
D)  stateE) A) and B)
F) None of the above

Question 20

Compared to an economy that uses a medium of exchange,in a barter economy

Accepted Answer

A)  transaction costs are higher.
B)  transaction costs are lower.
C)  liquidity costs are higher.
D)  liquidity costs are lower.E) A) and B)
F) A) and C)

Exam 3: What Is Money

Which of the following is not included in the measure of M1?

Correct AnswerverifiedShow Answer

Increasing transactions costs of selling an asset make the asset

Correct AnswerverifiedShow Answer

Which of the following is included in M2 but not in M1?

Correct AnswerverifiedShow Answer

In explaining the evolution of money

Correct AnswerverifiedShow Answer

What factors have slowed down the movement to a system where all payments are made electronically?

Correct AnswerverifiedThe equipment necessary to set up the sy...View AnswerShow Answer

All of the following are necessary criteria for a commodity to function as money except

Correct AnswerverifiedShow Answer

A problem with barter exchange when there are many goods is that in a barter system

Correct AnswerverifiedShow Answer

A fall in the level of prices

Correct AnswerverifiedC

________ is the narrowest monetary aggregate that the Fed reports.

Correct AnswerverifiedShow Answer

Which of the following is a true statement?

Correct AnswerverifiedShow Answer

Of the following assets,the least liquid is

Correct AnswerverifiedShow Answer

Which of the following is not a form of e-money?

Correct AnswerverifiedShow Answer

The payments system is

Correct AnswerverifiedShow Answer

A person's house is part of her

Correct AnswerverifiedShow Answer

Patrick places his pocket change into his savings bank on his desk each evening.By his actions,Patrick indicates that he believes that money is a

Correct AnswerverifiedC

Compared to an electronic payments system,a payments system based on checks has the major drawback that

Correct AnswerverifiedShow Answer

Which of the following is not included in the M1 measure of money but is included in the M2 measure of money?

Correct AnswerverifiedD

Explain how cigarettes could be called "money" in prisoner-of-war camps of World War II.

Correct AnswerverifiedThe cigarettes performed the three funct...View AnswerShow Answer

The Fed estimates initial monetary aggregate reports because ________ depository institutions report the amount of their deposits infrequently.

Correct AnswerverifiedShow Answer

Compared to an economy that uses a medium of exchange,in a barter economy

Correct AnswerverifiedShow Answer

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The equipment necessary to set up the sy...
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C

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C

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D

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The cigarettes performed the three funct...
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