Question 1

Using a good as a medium of exchange confers the benefit that

Accepted Answer

A) the need to quote so many prices in trade is reduced. 
B) the need for a double coincidence of wants is greatly increased. 
C) the need for specialization is reduced. 
D) transactions costs are increased, but they now may be paid in money terms. 
A) the need to quote so many prices in trade is reduced. 
B) the need for a double coincidence of wants is greatly increased. 
C) the need for specialization is reduced. 
D) transactions costs are increased, but they now may be paid in money terms.

Question 2

Suppose $100 buys less in the year 2007 than in 2000. Then we can say that

Accepted Answer

A) there must have been inflation between 2000 and 2007. 
B) there must have been deflation between 2000 and 2007. 
C) the economy must have been growing rapidly between 2000 and 2007. 
D) the economy must have been growing slowly between 2000 and 2007. 
A) there must have been inflation between 2000 and 2007. 
B) there must have been deflation between 2000 and 2007. 
C) the economy must have been growing rapidly between 2000 and 2007. 
D) the economy must have been growing slowly between 2000 and 2007.

Question 3

The problem of a double coincidence of wants refers to

Accepted Answer

A) the insatiability of wants in a free market economy. 
B) poorly-managed companies producing what consumers want only by coincidence. 
C) the necessity in a barter system of each trading partner wanting what the other has to trade. 
D) the likelihood that needs will not be the same as wants. 
A) the insatiability of wants in a free market economy. 
B) poorly-managed companies producing what consumers want only by coincidence. 
C) the necessity in a barter system of each trading partner wanting what the other has to trade. 
D) the likelihood that needs will not be the same as wants.

Question 4

Fiat money

Accepted Answer

A) is money that would have no value if it were not usable as money. 
B) is illegal in most advanced, industrial countries. 
C) is usually some type of precious metal. 
D) will generally be accepted in trade for less than its face value. 
A) is money that would have no value if it were not usable as money. 
B) is illegal in most advanced, industrial countries. 
C) is usually some type of precious metal. 
D) will generally be accepted in trade for less than its face value.

Question 5

The common currency in Europe is called the

Accepted Answer

A) euro. 
B) pound. 
C) sovereign. 
D) dollar. 
A) euro. 
B) pound. 
C) sovereign. 
D) dollar.

Question 6

What is the most important factor for Federal Reserve currency to be accepted as money?

Accepted Answer

A) Its acceptance by businesses and households in the United States in exchange for goods and services 
B) Its designation as legal tender by the federal government 
C) The willingness of the federal government to accept it in exchange for an equivalent amount of gold or silver coins 
D) The willingness of foreign businesses and banks to accept it in exchange for goods and services 
A) Its acceptance by businesses and households in the United States in exchange for goods and services 
B) Its designation as legal tender by the federal government 
C) The willingness of the federal government to accept it in exchange for an equivalent amount of gold or silver coins 
D) The willingness of foreign businesses and banks to accept it in exchange for goods and services

Question 7

Which of the following is NOT a significant cost that a barter system imposes on an economy?

Accepted Answer

A) Many prices must be maintained for each good. 
B) Only agricultural goods may be traded. 
C) Specialization of labor is hindered. 
D) The costs arising from the problem of finding two people who each want what the other produces. 
A) Many prices must be maintained for each good. 
B) Only agricultural goods may be traded. 
C) Specialization of labor is hindered. 
D) The costs arising from the problem of finding two people who each want what the other produces.

Question 8

When was the common European currency introduced?

Accepted Answer

A) 1914 
B) 1945 
C) 1970 
D) 1999 
A) 1914 
B) 1945 
C) 1970 
D) 1999

Question 9

Eight cents earned in 1940 would have been able to buy goods and services worth how much today?

Accepted Answer

A) $0.10 
B) $0.20 
C) $1.00 
D) $10.00 
A) $0.10 
B) $0.20 
C) $1.00 
D) $10.00

Question 10

By "specialization" economists mean a situation where

Accepted Answer

A) individuals produce the goods or services for which they have relatively the best ability. 
B) goods are traded directly for goods and money is not used. 
C) individuals who produce goods do not also produce services and individuals who produce services do not also produce goods. 
D) individuals are assigned to occupations on the basis of tests that gauge their relative abilities. 
A) individuals produce the goods or services for which they have relatively the best ability. 
B) goods are traded directly for goods and money is not used. 
C) individuals who produce goods do not also produce services and individuals who produce services do not also produce goods. 
D) individuals are assigned to occupations on the basis of tests that gauge their relative abilities.

Question 11

What criteria should be used in deciding the best definition of the money supply?

Accepted Answer

The answer depends on the purpose of the

Question 12

The collapse of economic systems in Eastern Europe during the late 1980s reveals that

Accepted Answer

A) a barter system will not work. 
B) a barter system will work only in an advanced industrial country. 
C) government allocation of goods and services is not a successful replacement for the market system. 
D) the market system will work well only in an advanced industrial country. 
A) a barter system will not work. 
B) a barter system will work only in an advanced industrial country. 
C) government allocation of goods and services is not a successful replacement for the market system. 
D) the market system will work well only in an advanced industrial country.

Using a good as a medium of exchange confers the benefit that

Suppose $100 buys less in the year 2007 than in 2000. Then we can say that

The problem of a double coincidence of wants refers to

Fiat money

The common currency in Europe is called the

What is the most important factor for Federal Reserve currency to be accepted as money?

Which of the following is NOT a significant cost that a barter system imposes on an economy?

When was the common European currency introduced?

Eight cents earned in 1940 would have been able to buy goods and services worth how much today?

By "specialization" economists mean a situation where

What criteria should be used in deciding the best definition of the money supply?

The collapse of economic systems in Eastern Europe during the late 1980s reveals that

Introducing Money and the Financial System

Overview of the Financial System

Interest Rates and Rates of Return

The Theory of Portfolio Allocation

Determining Market Interest Rates

Risk Structure and Term Structure of Interest Rates

The Foreign-Exchange Market and Exchange Rates

Derivative Securities and Derivative Markets

Information and Financial Market Efficiency

Reducing Transactions Costs and Information Costs

What Financial Institutions Do

The Business of Banking

The Banking Industry

Banking Regulation: Crisis and Response

Banking in the International Economy

The Money Supply Process

Changes in the Monetary Base

Organization of Central Banks

Monetary Policy Tools

The Conduct of Monetary Policy

The International Financial System and Monetary Policy

The Demand for Money

Linking the Financial System and the Economy: the Is-Lm-Fe Model

Aggregate Demand and Aggregate Supply

Money and Output in the Short Run

Information Problems and Channels for Monetary Policy

Inflation: Causes and Consequences

Filters

Exam 2: Money and the Payments System

Using a good as a medium of exchange confers the benefit that

Suppose $100 buys less in the year 2007 than in 2000. Then we can say that

The problem of a double coincidence of wants refers to

Fiat money

The common currency in Europe is called the

What is the most important factor for Federal Reserve currency to be accepted as money?

Which of the following is NOT a significant cost that a barter system imposes on an economy?

When was the common European currency introduced?

Eight cents earned in 1940 would have been able to buy goods and services worth how much today?

By "specialization" economists mean a situation where

What criteria should be used in deciding the best definition of the money supply?

The collapse of economic systems in Eastern Europe during the late 1980s reveals that

Introducing Money and the Financial System

Overview of the Financial System

Interest Rates and Rates of Return

The Theory of Portfolio Allocation

Determining Market Interest Rates

Risk Structure and Term Structure of Interest Rates

The Foreign-Exchange Market and Exchange Rates

Derivative Securities and Derivative Markets

Information and Financial Market Efficiency

Reducing Transactions Costs and Information Costs

What Financial Institutions Do

The Business of Banking

The Banking Industry

Banking Regulation: Crisis and Response

Banking in the International Economy

The Money Supply Process

Changes in the Monetary Base

Organization of Central Banks

Monetary Policy Tools

The Conduct of Monetary Policy

The International Financial System and Monetary Policy

The Demand for Money

Linking the Financial System and the Economy: the Is-Lm-Fe Model

Aggregate Demand and Aggregate Supply

Money and Output in the Short Run

Information Problems and Channels for Monetary Policy

Inflation: Causes and Consequences

Filters