Question 1

Overnight repurchase agreements are not included in which of the following definition of the money supply?

Accepted Answer

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

Question 2

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

Accepted Answer

A)  financial assets 
B)  real assets 
C)  government investments 
D)  individual savings 
A)  financial assets 
B)  real assets 
C)  government investments 
D)  individual savings

Question 3

Only depository institutions as a group can create money.

Accepted Answer

A) True 
 B)False

Question 4

The function of money that expresses prices and contracts for deferred payments in terms of the monetary unit is referred to as

Accepted Answer

A)  store of purchasing power 
B)  standard of value 
C)  medium of exchange 
D)  credit money 
A)  store of purchasing power 
B)  standard of value 
C)  medium of exchange 
D)  credit money

Question 5

_______________________ is the sum of an individual's money, real assets, and financial assets or claims against others less the individual's debt obligations.

Accepted Answer

A)  Portfolio value 
B)  Individual net worth 
C)  Personal wealth 
D)  Investment value 
A)  Portfolio value 
B)  Individual net worth 
C)  Personal wealth 
D)  Investment value

Question 6

Which of the following statements is false?

Accepted Answer

A)  Until the Civil War, the federal government was the major issuer of paper money. 
B)  In order for traders in early economies to accept or barter for items, the supply of the item had to be limited in relation to the desire of individual in the economy to have the item. 
C)  Collectors of old coins and paper money are referred to as numismatists. 
D)  Money functions as a store of value. 
A)  Until the Civil War, the federal government was the major issuer of paper money. 
B)  In order for traders in early economies to accept or barter for items, the supply of the item had to be limited in relation to the desire of individual in the economy to have the item. 
C)  Collectors of old coins and paper money are referred to as numismatists. 
D)  Money functions as a store of value.

Question 7

Deposit money is backed by the creditworthiness of the depository institution that issued the deposit.

Accepted Answer

A) True 
 B)False

Question 8

Monetary policy makers can stimulate economic activity through increased monetary liquidity by making more money available (but at higher borrowing costs) to businesses, investors, and others.

Accepted Answer

A) True 
 B)False

Question 9

_______________________issue shares to customers and invest the proceeds in highly liquid, very-short-maturity, interest-bearing debt instruments called money market investments.

Accepted Answer

A)  Money market mutual funds (MMMFs) 
B)  Corporations 
C)  Insurance companies 
D)  Stock brokers 
A)  Money market mutual funds (MMMFs) 
B)  Corporations 
C)  Insurance companies 
D)  Stock brokers

Question 10

Money market funds are not included in which of the following definitions of the money supply?

Accepted Answer

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

Question 11

The only paper money of significance in the economy today is:

Accepted Answer

A)  silver certificates 
B)  demand deposits 
C)  greenbacks 
D)  Federal Reserve notes 
A)  silver certificates 
B)  demand deposits 
C)  greenbacks 
D)  Federal Reserve notes

Question 12

Treasury bills are money market securities.

Accepted Answer

A) True 
 B)False

Question 13

A store of purchasing power is the most important function of money.

Accepted Answer

A) True 
 B)False

Question 14

Keynesians believe that when the supply of money exceeds the quantity demanded, the public will spend more rapidly causing inflation.

Accepted Answer

A) True 
 B)False

Question 15

The M1 definition of the money supply includes which of the following items?

Accepted Answer

A)  silver and gold bars 
B)  government bonds 
C)  gold reserves 
D)  travelers' checks 
A)  silver and gold bars 
B)  government bonds 
C)  gold reserves 
D)  travelers' checks

Question 16

Traveler's checks are part of the M1 money supply.

Accepted Answer

A) True 
 B)False

Question 17

If annual GDP is $100 billion and the MS is $20 billion, the velocity of money (VM) is ________.

Accepted Answer

A)  2 
B)  5 
C)  20 
D)  50 
A)  2 
B)  5 
C)  20 
D)  50

Question 18

A bimetallic standard is a monetary standard based on two metals, usually silver and gold.

Accepted Answer

A) True 
 B)False

Question 19

Keynesians believe that a change in the money supply first causes a change in interest rate levels, which, in turn, alters the demand for goods and services.

Accepted Answer

A) True 
 B)False

Question 20

The federal government helped out financial institutions during the Great Recession so that none were allowed to fail.

Accepted Answer

A) True 
 B)False

Overnight repurchase agreements are not included in which of the following definition of the money supply?

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

Only depository institutions as a group can create money.

The function of money that expresses prices and contracts for deferred payments in terms of the monetary unit is referred to as

_______________________ is the sum of an individual's money, real assets, and financial assets or claims against others less the individual's debt obligations.

Which of the following statements is false?

Deposit money is backed by the creditworthiness of the depository institution that issued the deposit.

Monetary policy makers can stimulate economic activity through increased monetary liquidity by making more money available (but at higher borrowing costs) to businesses, investors, and others.

_______________________issue shares to customers and invest the proceeds in highly liquid, very-short-maturity, interest-bearing debt instruments called money market investments.

Money market funds are not included in which of the following definitions of the money supply?

The only paper money of significance in the economy today is:

Treasury bills are money market securities.

A store of purchasing power is the most important function of money.

Keynesians believe that when the supply of money exceeds the quantity demanded, the public will spend more rapidly causing inflation.

The M1 definition of the money supply includes which of the following items?

Traveler's checks are part of the M1 money supply.

If annual GDP is $100 billion and the MS is $20 billion, the velocity of money (VM) is ________.

A bimetallic standard is a monetary standard based on two metals, usually silver and gold.

Keynesians believe that a change in the money supply first causes a change in interest rate levels, which, in turn, alters the demand for goods and services.

The federal government helped out financial institutions during the Great Recession so that none were allowed to fail.

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

Overnight repurchase agreements are not included in which of the following definition of the money supply?

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

Only depository institutions as a group can create money.

The function of money that expresses prices and contracts for deferred payments in terms of the monetary unit is referred to as

_______________________ is the sum of an individual's money, real assets, and financial assets or claims against others less the individual's debt obligations.

Which of the following statements is false?

Deposit money is backed by the creditworthiness of the depository institution that issued the deposit.

Monetary policy makers can stimulate economic activity through increased monetary liquidity by making more money available (but at higher borrowing costs) to businesses, investors, and others.

_______________________issue shares to customers and invest the proceeds in highly liquid, very-short-maturity, interest-bearing debt instruments called money market investments.

Money market funds are not included in which of the following definitions of the money supply?

The only paper money of significance in the economy today is:

Treasury bills are money market securities.

A store of purchasing power is the most important function of money.

Keynesians believe that when the supply of money exceeds the quantity demanded, the public will spend more rapidly causing inflation.

The M1 definition of the money supply includes which of the following items?

Traveler's checks are part of the M1 money supply.

If annual GDP is $100 billion and the MS is $20 billion, the velocity of money (VM) is ________.

A bimetallic standard is a monetary standard based on two metals, usually silver and gold.

Keynesians believe that a change in the money supply first causes a change in interest rate levels, which, in turn, alters the demand for goods and services.

The federal government helped out financial institutions during the Great Recession so that none were allowed to fail.

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