Exam 2: Money and the Monetary System

Purchasing power is the amount of gold and silver that can be purchased with a unit of money.

A ____________ is a short-term debt instrument issued by commercial banks in denominations of $100,000 or more with typical maturities ranging from one month to one year that have an active secondary market that allows short-term investors to easily match their cash or liquidity needs when they arise.

Fiat money must be backed by a specific amount of gold or silver.

Which of the following are not included in M1?

The savings-investment process involves the direct or indirect transfer of individual savings to business firms in exchange for goods and services.

The use of "continentals" led to a long period of distrust of paper money.

Fiat money is

The price level of goods and services may be expressed as the ratio of _____________.

Real assets include the direct ownership of land, buildings or homes, equipment, inventories, durable goods, and even precious metals.

Paper money backed by a precious metal is called

The Great Recession happened in 2008-2010.

Currently, the international monetary system can best be described as a managed pegged exchange rate system.

The monetary system is responsible for carrying out the financial functions of creating and transferring money.

A measure of the output of goods and services in an economy is called:

Paper money fully backed by a precious metal and issued by the government is called

Deposit money is backed by:

Paper money is always fully backed by a precious metal; although, it does not have to be gold or silver.

Creating and transferring money are integral parts of the:

Physical money includes coin and currency.

A surplus economic unit generates more money than it spends, and thus it has excess money to save or invest.