Question 1

The role of financial markets in a country's financial system is to accumulate and invest savings.

Accepted Answer

A) True 
 B)False

Question 2

A rise in prices that is fully offset by increases in quality is called

Accepted Answer

A)  deflation 
B)  inflation 
C)  stagflation 
D)  none of the above 
A)  deflation 
B)  inflation 
C)  stagflation 
D)  none of the above

Question 3

Which of the following statements is false?

Accepted Answer

A)  Money can always function as a store of purchasing power, even if its value is relatively unstable. 
B)  The ease with which an asset can be exchanged for money or other assets is referred to as liquidity. 
C)  Credit money is any circulating medium which has little intrinsic value relative to its monetary value. 
D)  In the future, electronic funds transfer systems may be used to such an extent that a virtually checkless society may result. 
A)  Money can always function as a store of purchasing power, even if its value is relatively unstable. 
B)  The ease with which an asset can be exchanged for money or other assets is referred to as liquidity. 
C)  Credit money is any circulating medium which has little intrinsic value relative to its monetary value. 
D)  In the future, electronic funds transfer systems may be used to such an extent that a virtually checkless society may result.

Question 4

Which of the following statements is false?

Accepted Answer

A)  The Bretton Wood System of fixed exchange rates was maintained until 1975. 
B)  Under the Bretton Wood System, one ounce of gold was set equal to $35. 
C)  Under the Bretton Wood System, each participating country had it currency pegged to either gold or the U.S. dollar. 
D)  Bretton Woods set fixed exchange rates based on a fixed gold price. 
A)  The Bretton Wood System of fixed exchange rates was maintained until 1975. 
B)  Under the Bretton Wood System, one ounce of gold was set equal to $35. 
C)  Under the Bretton Wood System, each participating country had it currency pegged to either gold or the U.S. dollar. 
D)  Bretton Woods set fixed exchange rates based on a fixed gold price.

Question 5

All money must perform the following basic functions except:

Accepted Answer

A)  guarantee of validity 
B)  medium of exchange 
C)  standard of value 
D)  store of value 
A)  guarantee of validity 
B)  medium of exchange 
C)  standard of value 
D)  store of value

Question 6

Monetarists also believe that when the money supply exceeds the amount of money demanded, the public will spend more rapidly, causing real economic activity or prices to rise.

Accepted Answer

A) True 
 B)False

Question 7

The narrowest definition of money supply is:

Accepted Answer

A)  M1 
B)  M2 
C)  M3 
D)  M4 
A)  M1 
B)  M2 
C)  M3 
D)  M4

Question 8

Beginning in 1961, U.S. citizens were prohibited from holding monetary gold in the United States or abroad.

Accepted Answer

A) True 
 B)False

Question 9

Barter involves the exchange of:

Accepted Answer

A)  goods for gold 
B)  goods for silver 
C)  gold for silver 
D)  goods and services 
A)  goods for gold 
B)  goods for silver 
C)  gold for silver 
D)  goods and services

Question 10

No full-bodied or representative full-bodied money is in use in the United States today.

Accepted Answer

A) True 
 B)False

Question 11

Silver is part of the M1 money supply.

Accepted Answer

A) True 
 B)False

Question 12

____________ is anything generally accepted as a means of paying for goods and services and for paying off debts. It must be easily divisible, so that exchanges can take place in small or large quantities; relatively inexpensive to store and transfer; and reasonably stable in value over time.

Accepted Answer

A)  A financial asset 
B)  A real asset 
C)  money 
D)  barter 
A)  A financial asset 
B)  A real asset 
C)  money 
D)  barter

Question 13

Representative full-bodied money is paper money that is backed by an amount of precious metal equal in value to the face amount of the paper money.

Accepted Answer

A) True 
 B)False

Question 14

Credit money is money backed by the creditworthiness of the United States Government.

Accepted Answer

A) True 
 B)False

Question 15

The faster the rate of circulation of the money supply, the greater the output of goods and services in an economy.

Accepted Answer

A) True 
 B)False

Question 16

____________ accounts are increasingly used to make direct deposits to, and payments from, checkable deposit accounts.

Accepted Answer

A)  single balance 
B)  money market 
C)  automatic transfer service (ATS) 
D)  capital market 
A)  single balance 
B)  money market 
C)  automatic transfer service (ATS) 
D)  capital market

Question 17

Which of the following is not a component of the M1 definition of the money supply?

Accepted Answer

A)  travelers' checks 
B)  savings and small time deposits at depository institutions 
C)  currency held by the non-bank public 
D)  demand deposits at depository institutions 
A)  travelers' checks 
B)  savings and small time deposits at depository institutions 
C)  currency held by the non-bank public 
D)  demand deposits at depository institutions

Question 18

Any circulating money which has little real value relative to its monetary value is called

Accepted Answer

A)  credit money 
B)  representative full-bodied money 
C)  full-bodied money 
D)  reserve money 
A)  credit money 
B)  representative full-bodied money 
C)  full-bodied money 
D)  reserve money

Question 19

Credit money is backed by:

Accepted Answer

A)  gold 
B)  silver 
C)  creditworthiness of the issuer 
D)  creditworthiness of the depository institution 
A)  gold 
B)  silver 
C)  creditworthiness of the issuer 
D)  creditworthiness of the depository institution

Question 20

When it is a means of paying for goods and services and discharging debts, money is referred to as a:

Accepted Answer

A)  store of purchasing power 
B)  medium of exchange 
C)  standard of value 
D)  liquid asset 
A)  store of purchasing power 
B)  medium of exchange 
C)  standard of value 
D)  liquid asset

The role of financial markets in a country's financial system is to accumulate and invest savings.

A rise in prices that is fully offset by increases in quality is called

Which of the following statements is false?

Which of the following statements is false?

All money must perform the following basic functions except:

Monetarists also believe that when the money supply exceeds the amount of money demanded, the public will spend more rapidly, causing real economic activity or prices to rise.

The narrowest definition of money supply is:

Beginning in 1961, U.S. citizens were prohibited from holding monetary gold in the United States or abroad.

Barter involves the exchange of:

No full-bodied or representative full-bodied money is in use in the United States today.

Silver is part of the M1 money supply.

____________ is anything generally accepted as a means of paying for goods and services and for paying off debts. It must be easily divisible, so that exchanges can take place in small or large quantities; relatively inexpensive to store and transfer; and reasonably stable in value over time.

Representative full-bodied money is paper money that is backed by an amount of precious metal equal in value to the face amount of the paper money.

Credit money is money backed by the creditworthiness of the United States Government.

The faster the rate of circulation of the money supply, the greater the output of goods and services in an economy.

____________ accounts are increasingly used to make direct deposits to, and payments from, checkable deposit accounts.

Which of the following is not a component of the M1 definition of the money supply?

Any circulating money which has little real value relative to its monetary value is called

Credit money is backed by:

When it is a means of paying for goods and services and discharging debts, money is referred to as a:

The Financial Environment

Banks and Other Financial Institutions

Federal Reserve System

Policy Makers and the Money Supply

International Finance and Trade

Savings and Investment Process

Interest Rates

Time Value of Money

Bonds and Stocks: Characteristics and Valuations

Securities and Markets

Financial Return and Risk Concepts

Business Organization and Financial Data

Financial Analysis and Long-Term Financial Planning

Managing Working Capital

Short-Term Business Financing

Capital Budgeting Analysis

Capital Structure and the Cost of Capital

Filters

Exam 2: Money and the Monetary System

The role of financial markets in a country's financial system is to accumulate and invest savings.

A rise in prices that is fully offset by increases in quality is called

Which of the following statements is false?

Which of the following statements is false?

All money must perform the following basic functions except:

Monetarists also believe that when the money supply exceeds the amount of money demanded, the public will spend more rapidly, causing real economic activity or prices to rise.

The narrowest definition of money supply is:

Beginning in 1961, U.S. citizens were prohibited from holding monetary gold in the United States or abroad.

Barter involves the exchange of:

No full-bodied or representative full-bodied money is in use in the United States today.

Silver is part of the M1 money supply.

____________ is anything generally accepted as a means of paying for goods and services and for paying off debts. It must be easily divisible, so that exchanges can take place in small or large quantities; relatively inexpensive to store and transfer; and reasonably stable in value over time.

Representative full-bodied money is paper money that is backed by an amount of precious metal equal in value to the face amount of the paper money.

Credit money is money backed by the creditworthiness of the United States Government.

The faster the rate of circulation of the money supply, the greater the output of goods and services in an economy.

____________ accounts are increasingly used to make direct deposits to, and payments from, checkable deposit accounts.

Which of the following is not a component of the M1 definition of the money supply?

Any circulating money which has little real value relative to its monetary value is called

Credit money is backed by:

When it is a means of paying for goods and services and discharging debts, money is referred to as a:

The Financial Environment

Banks and Other Financial Institutions

Federal Reserve System

Policy Makers and the Money Supply

International Finance and Trade

Savings and Investment Process

Interest Rates

Time Value of Money

Bonds and Stocks: Characteristics and Valuations

Securities and Markets

Financial Return and Risk Concepts

Business Organization and Financial Data

Financial Analysis and Long-Term Financial Planning

Managing Working Capital

Short-Term Business Financing

Capital Budgeting Analysis

Capital Structure and the Cost of Capital

Filters