Exam 2: Money and the Payments System

Consider two barter economies: Duos and Varietas. Duos produces two different goods, whereas Varietas produces 80 different goods. Both countries have the same number of people. In which barter economy is it more likely that the means of payment and the units of account would be efficient? How many relative prices are there in Duos compared with Varietas? Which economy would benefit more from adopting money?

An individual who stores wealth in art rather than money will find that he/she:

Most of the non-cash retail payments made each year in the United States are made by:

Sue uses a credit card to purchase a new pair of jeans. Sue is:

U.S. currency is

In the chapter you read that it costs the U.S. Treasury's Bureau of Engraving and Printing around 5 ½ cents to print a $1 bill, 10 ½ cents to print a $20 bill, and a bit over 14 cents to print a $100 bill. It seems the Treasury could generate a nice profit for the government by simply printing currency and using this currency to purchase the goods and services the government needs. In fact, this seems to be a way to eliminate the problem of budget deficits for the U.S. government. Comment on this idea.

Has M2 always been a useful tool for forecasting inflation? Explain.

After the Revolutionary War, the U.S. monetary system was based on gold. Historically, why did the U.S. adopt the use of gold as a currency? How does this compare with the currency used today?

M1 has decreased in its usefulness in understanding inflation due to:

Gross Domestic Product in the U.S. is roughly:

When the price level increases, the purchasing power of money:

Sophia receives a $400 gift card for her campus bookstore from her parents. Which of the following is true regarding the $400 gift card?

The purchasing power of money:

The money aggregate M2 includes:

As a result of "Check 21-The Check Clearing for the 21st Century Act":

The Consumer Price Index (CPI):

Which of the following could not be commodity money?

One major difference between a debit and credit card is:

During the Civil War, the North issued currency, known as "greenbacks". Which of the following is true of "greenbacks"?

Comparing checks and currency, we can say: