Question 1

An increase in the currency drain

Accepted Answer

A)  results in an increase in required reserves. 
B)  decreases the size of the money multiplier. 
C)  leads to an increase in excess reserves. 
D)  results in an increase in deposits. 
A)  results in an increase in required reserves. 
B)  decreases the size of the money multiplier. 
C)  leads to an increase in excess reserves. 
D)  results in an increase in deposits.

Question 2

Which of the following does NOT describe a function of money?

Accepted Answer

A)  barter 
B)  a medium of exchange 
C)  a unit of account 
D)  a store of value 
A)  barter 
B)  a medium of exchange 
C)  a unit of account 
D)  a store of value

Question 3

When Patty uses money to buy her lunch, she is showing the use of money as a ʺstore of value.ʺ

Accepted Answer

A) True 
 B)False

Question 4

In Zealand, banksʹ desired reserve ratio is 20 percent and there is no currency drain. The money multiplier equals _____________ .

Accepted Answer

A)  20.0 
B)  0.20 
C)  0.50 
D)  5.0 
A)  20.0 
B)  0.20 
C)  0.50 
D)  5.0

Question 5

A currency drain occurs because people want to hold some of their money as currency rather than as deposits.

Accepted Answer

A) True 
 B)False

Question 6

What are the three functions of money?

Accepted Answer

Money serves as a medium of exchange so

Question 7

A $25,000 price tag on a new car is an example of money as

Accepted Answer

A)  a unit of account. 
B)  a store of value. 
C)  medium of exchange. 
D)  a time deposit. 
A)  a unit of account. 
B)  a store of value. 
C)  medium of exchange. 
D)  a time deposit.

Question 8

The quantity theory of money predicts how changes in

Accepted Answer

A)  the quantity of money affect the price level. 
B)  the price level affect real GDP. 
C)  the price level affect nominal GDP. 
D)  real GDP affect the nominal GDP. 
A)  the quantity of money affect the price level. 
B)  the price level affect real GDP. 
C)  the price level affect nominal GDP. 
D)  real GDP affect the nominal GDP.

Question 9

The banking system has just experienced an increase in deposits of $50,000. The currency drain ratio is 20 percent and the desired reserve ratio is 10 percent. What does the money multiplier equal?

Accepted Answer

A)  3.33 
B)  10.00 
C)  4.00 
D)  0.25 
A)  3.33 
B)  10.00 
C)  4.00 
D)  0.25

Question 10

According to the quantity theory of money, in the long run an increase in the quantity of money creates an increase in the price level but does not increase real GDP.

Accepted Answer

A) True 
 B)False

Question 11

Money .

Accepted Answer

A)  is any commodity that is generally acceptable as a means of payment 
B)  loses its value as it becomes older 
C)  is always composed of coins and paper 
D)  requires a double coincidence of wants 
A)  is any commodity that is generally acceptable as a means of payment 
B)  loses its value as it becomes older 
C)  is always composed of coins and paper 
D)  requires a double coincidence of wants

Question 12

Cigarettes served as money in some POW camps during World War II. Given this fact, we would expect to observe

Accepted Answer

A)  prices of other goods expressed in terms of cigarettes. 
B)  no one ever smoking a cigarette. 
C)  only government-issued cigarettes being accepted as money. 
D)  people usually resorting to barter rather than using cigarettes as money. 
A)  prices of other goods expressed in terms of cigarettes. 
B)  no one ever smoking a cigarette. 
C)  only government-issued cigarettes being accepted as money. 
D)  people usually resorting to barter rather than using cigarettes as money.

Question 13

In a world with no money, costs are expressed in terms of other goods. If one video game costs two hamburgers, and a hamburger costs three sodas, how many sodas would it take to buy a video game?

Accepted Answer

A)  3/2 
B)  5 
C)  3 
D)  6 
A)  3/2 
B)  5 
C)  3 
D)  6

Question 14

The money supply, as measured by M1, consists almost entirely of currency.

Accepted Answer

A) True 
 B)False

Question 15

According to the quantity theory of money, in the long run, an increase in the quantity of money does not change real GDP but does raise the price level.

Accepted Answer

A) True 
 B)False

Question 16

Suppose that the interest rate is greater than the equilibrium interest rate. Which of the following occurs?
I. There is an excess quantity of money.
II. The quantity of money automatically increases.
III. The interest rate falls.

Accepted Answer

A)  I and II 
B)  I 
C)  I and III 
D)  I, II and III 
A)  I and II 
B)  I 
C)  I and III 
D)  I, II and III

Question 17

Explain the process by which the banking system creates money.

Accepted Answer

When a bank gains excess reserves, it us

Question 18

Which of the following is NOT included in the M1 measure of money?

Accepted Answer

A)  savings deposits 
B)  currency 
C)  travelerʹs checks 
D)  checking deposits 
A)  savings deposits 
B)  currency 
C)  travelerʹs checks 
D)  checking deposits

Question 19

What assets are included in M1? In M2? Is all of M1 and M2 money? If some assets of M1 or M2 are not money, why are they included in M1 or M2?

Accepted Answer

M1 is the sum of currency outside of the

Question 20

In the short run, which of the following actions lower the interest rate?

Accepted Answer

A)  a decrease in bond prices 
B)  a decrease in the quantity of money 
C)  an increase in the demand for money 
D)  a decrease in the demand for money 
A)  a decrease in bond prices 
B)  a decrease in the quantity of money 
C)  an increase in the demand for money 
D)  a decrease in the demand for money

An increase in the currency drain

Which of the following does NOT describe a function of money?

When Patty uses money to buy her lunch, she is showing the use of money as a ʺstore of value.ʺ

In Zealand, banksʹ desired reserve ratio is 20 percent and there is no currency drain. The money multiplier equals _____________ .

A currency drain occurs because people want to hold some of their money as currency rather than as deposits.

What are the three functions of money?

A $25,000 price tag on a new car is an example of money as

The quantity theory of money predicts how changes in

The banking system has just experienced an increase in deposits of $50,000. The currency drain ratio is 20 percent and the desired reserve ratio is 10 percent. What does the money multiplier equal?

According to the quantity theory of money, in the long run an increase in the quantity of money creates an increase in the price level but does not increase real GDP.

Money .

Cigarettes served as money in some POW camps during World War II. Given this fact, we would expect to observe

In a world with no money, costs are expressed in terms of other goods. If one video game costs two hamburgers, and a hamburger costs three sodas, how many sodas would it take to buy a video game?

The money supply, as measured by M1, consists almost entirely of currency.

According to the quantity theory of money, in the long run, an increase in the quantity of money does not change real GDP but does raise the price level.

Suppose that the interest rate is greater than the equilibrium interest rate. Which of the following occurs? I. There is an excess quantity of money. II. The quantity of money automatically increases. III. The interest rate falls.

Explain the process by which the banking system creates money.

Which of the following is NOT included in the M1 measure of money?

What assets are included in M1? In M2? Is all of M1 and M2 money? If some assets of M1 or M2 are not money, why are they included in M1 or M2?

In the short run, which of the following actions lower the interest rate?

What Is Economics

The Economic Problem

Demand and Supply

Measuring Gdp and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

Expenditure Multipliers: the Keynesian Model

U.S Inflation, Unemployment, and Business Cycle

Fiscal Policy

Monetary Policy

International Trade Policy

Review

Filters

Exam 8: Money, the Price Level, and Inflation

An increase in the currency drain

Which of the following does NOT describe a function of money?

When Patty uses money to buy her lunch, she is showing the use of money as a ʺstore of value.ʺ

In Zealand, banksʹ desired reserve ratio is 20 percent and there is no currency drain. The money multiplier equals _____________ .

A currency drain occurs because people want to hold some of their money as currency rather than as deposits.

What are the three functions of money?

A $25,000 price tag on a new car is an example of money as

The quantity theory of money predicts how changes in

The banking system has just experienced an increase in deposits of $50,000. The currency drain ratio is 20 percent and the desired reserve ratio is 10 percent. What does the money multiplier equal?

According to the quantity theory of money, in the long run an increase in the quantity of money creates an increase in the price level but does not increase real GDP.

Money .

Cigarettes served as money in some POW camps during World War II. Given this fact, we would expect to observe

In a world with no money, costs are expressed in terms of other goods. If one video game costs two hamburgers, and a hamburger costs three sodas, how many sodas would it take to buy a video game?

The money supply, as measured by M1, consists almost entirely of currency.

According to the quantity theory of money, in the long run, an increase in the quantity of money does not change real GDP but does raise the price level.

Suppose that the interest rate is greater than the equilibrium interest rate. Which of the following occurs? I. There is an excess quantity of money. II. The quantity of money automatically increases. III. The interest rate falls.

Explain the process by which the banking system creates money.

Which of the following is NOT included in the M1 measure of money?

What assets are included in M1? In M2? Is all of M1 and M2 money? If some assets of M1 or M2 are not money, why are they included in M1 or M2?

In the short run, which of the following actions lower the interest rate?

What Is Economics

The Economic Problem

Demand and Supply

Measuring Gdp and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

Expenditure Multipliers: the Keynesian Model

U.S Inflation, Unemployment, and Business Cycle

Fiscal Policy

Monetary Policy

International Trade Policy

Review

Filters