Question 1

The exchange of one good for another, without the use of money, is known as:

Accepted Answer

A) acquisitive exchange. 
B) liquidity. 
C) volatility. 
D) barter. 
E) currency. 
A) acquisitive exchange. 
B) liquidity. 
C) volatility. 
D) barter. 
E) currency.

Question 2

The statement that Computech's profits totaled $500 million last year represents the use of money as a:

Accepted Answer

A) medium of exchange. 
B) store of value. 
C) unit of account. 
D) means of coincidence. 
A) medium of exchange. 
B) store of value. 
C) unit of account. 
D) means of coincidence.

Question 3

The Federal Reserve Board of Governors has:

Accepted Answer

A) seven members who serve 6-year terms. 
B) 12 members who serve 14-year terms. 
C) seven members who serve 4-year terms. 
D) 12 members who serve 4-year terms. 
E) seven members who serve 14-year terms. 
A) seven members who serve 6-year terms. 
B) 12 members who serve 14-year terms. 
C) seven members who serve 4-year terms. 
D) 12 members who serve 4-year terms. 
E) seven members who serve 14-year terms.

Question 4

The President and the Congress jointly determine the nation's monetary policies, and the Fed is required by law to implement those policies.

Accepted Answer

A) True 
 B)False

Question 5

What establishes the value of fiat money?

Accepted Answer

A) Our collective trust and confidence that the central government, which decrees that  money cannot be refused as payment for debt. 
B) Gold and silver owned by the large commercial banks. 
C) The central government authority's promise to redeem fiat money for gold or silver upon demand. 
D) None of the above. 
A) Our collective trust and confidence that the central government, which decrees that  money cannot be refused as payment for debt. 
B) Gold and silver owned by the large commercial banks. 
C) The central government authority's promise to redeem fiat money for gold or silver upon demand. 
D) None of the above.

Question 6

Anything can be money if it acts as a:

Accepted Answer

A) unit of account. 
B) store of value. 
C) medium of exchange. 
D) All of these must be correct. 
A) unit of account. 
B) store of value. 
C) medium of exchange. 
D) All of these must be correct.

Question 7

Which of the following is not counted as part of M1?

Accepted Answer

A) Coins. 
B) Federal Reserve notes or " paper money." 
C) Passbook savings deposits. 
D) Checkable deposits. 
A) Coins. 
B) Federal Reserve notes or " paper money." 
C) Passbook savings deposits. 
D) Checkable deposits.

Question 8

M2 is actually a smaller amount than M1.

Accepted Answer

A) True 
 B)False

Question 9

The government agency that provides insurance for all checkable deposits up to $100,000 in banks choosing its protection is the:

Accepted Answer

A) Federal Deposit Insurance Corporation. 
B) Federal Reserve. 
C) Office of Management and Budget. 
D) Treasury. 
E) Securities and Exchange Commission. 
A) Federal Deposit Insurance Corporation. 
B) Federal Reserve. 
C) Office of Management and Budget. 
D) Treasury. 
E) Securities and Exchange Commission.

Question 10

M1 is actually a smaller amount than M2.

Accepted Answer

A) True 
 B)False

Question 11

The Federal Deposit Insurance Corporation:

Accepted Answer

A) has eliminated bank failures. 
B) insures all demand deposits without limit. 
C) insures all demand deposits up to $100,000. 
D) insures all demand deposits up to $10,000. 
E) insures all savings and loan deposits up to $100,000. 
A) has eliminated bank failures. 
B) insures all demand deposits without limit. 
C) insures all demand deposits up to $100,000. 
D) insures all demand deposits up to $10,000. 
E) insures all savings and loan deposits up to $100,000.

Question 12

The difference between M1 and M2 is given by which of the following?

Accepted Answer

A) M1 includes currency, coins, gold and silver, whereas M2 does not contain gold and silver. 
B) M1 is made up of currency, traveler's checks, and money in checkable accounts, whereas M2 contains M1 plus savings deposits and time deposits. 
C) M1 is limited to currency, whereas M2 contains M1 plus traveler's checks and money in checkable accounts. 
D) M1 includes currency and traveler's checks, whereas M2 contains M1 plus money in checking accounts. 
A) M1 includes currency, coins, gold and silver, whereas M2 does not contain gold and silver. 
B) M1 is made up of currency, traveler's checks, and money in checkable accounts, whereas M2 contains M1 plus savings deposits and time deposits. 
C) M1 is limited to currency, whereas M2 contains M1 plus traveler's checks and money in checkable accounts. 
D) M1 includes currency and traveler's checks, whereas M2 contains M1 plus money in checking accounts.

Question 13

M1 refers to:

Accepted Answer

A) Federal Reserve Notes and gold certificates. 
B) Currency held by the public plus checking account balances. 
C) The largest of the money-supply definitions. 
D) None of these. 
A) Federal Reserve Notes and gold certificates. 
B) Currency held by the public plus checking account balances. 
C) The largest of the money-supply definitions. 
D) None of these.

Question 14

Money eliminates the need to barter.

Accepted Answer

A) True 
 B)False

Question 15

Barter is the:

Accepted Answer

A) direct exchange of goods and services. 
B) exchange of goods, but not services. 
C) system that does not depend on a coincidence of wants. 
D) system used in advanced economies. 
A) direct exchange of goods and services. 
B) exchange of goods, but not services. 
C) system that does not depend on a coincidence of wants. 
D) system used in advanced economies.

Question 16

M1 money includes all but which one of the following?

Accepted Answer

A) Checkable deposits. 
B) Savings accounts. 
C) Paper money. 
D) Coins. 
A) Checkable deposits. 
B) Savings accounts. 
C) Paper money. 
D) Coins.

Question 17

The primary functions of money are:

Accepted Answer

A) velocity, liquidity, and transactions. 
B) speculative demand, measure of value, and precautionary demand. 
C) a medium of exchange, a unit of account, and a store of value. 
D) a store of value, heterogeneity, and a medium of exchange. 
E) currency value, fiat value, and accepted value. 
A) velocity, liquidity, and transactions. 
B) speculative demand, measure of value, and precautionary demand. 
C) a medium of exchange, a unit of account, and a store of value. 
D) a store of value, heterogeneity, and a medium of exchange. 
E) currency value, fiat value, and accepted value.

Question 18

The Federal Funds Committee executes the purchases and sales of government securities decisions of the Federal Reserve.

Accepted Answer

A) True 
 B)False

Question 19

An economy using money is more efficient that a barter economy because the use of money reduces the time spent searching for trading partners with a coincidence of wants and therefore more time can be spent producing goods and services.

Accepted Answer

A) True 
 B)False

Question 20

A barter economy is one in which:

Accepted Answer

A) money serves as a medium of exchange. 
B) only precious metals are accepted as money. 
C) goods are traded directly for other goods. 
D) paper money is backed by gold. 
A) money serves as a medium of exchange. 
B) only precious metals are accepted as money. 
C) goods are traded directly for other goods. 
D) paper money is backed by gold.

Exam 14: Money and the Federal Reserve System

The exchange of one good for another, without the use of money, is known as:

The statement that Computech's profits totaled $500 million last year represents the use of money as a:

The Federal Reserve Board of Governors has:

The President and the Congress jointly determine the nation's monetary policies, and the Fed is required by law to implement those policies.

What establishes the value of fiat money?

Anything can be money if it acts as a:

Which of the following is not counted as part of M1?

M2 is actually a smaller amount than M1.

The government agency that provides insurance for all checkable deposits up to $100,000 in banks choosing its protection is the:

M1 is actually a smaller amount than M2.

The Federal Deposit Insurance Corporation:

The difference between M1 and M2 is given by which of the following?

M1 refers to:

Money eliminates the need to barter.

Barter is the:

M1 money includes all but which one of the following?

The primary functions of money are:

The Federal Funds Committee executes the purchases and sales of government securities decisions of the Federal Reserve.

An economy using money is more efficient that a barter economy because the use of money reduces the time spent searching for trading partners with a coincidence of wants and therefore more time can be spent producing goods and services.

A barter economy is one in which:

Introducing the Economic Way of Thinking

Production Possibilities, Opportunity Cost, and Economic Growth

Market Demand and Supply

Markets in Action

Gross Domestic Product

Business Cycles and Unemployment

Inflation

The Keynesian Model

The Keynesian Model in Action

Aggregate Demand and Supply

Fiscal Policy

The Public Sector

Federal Deficits, Surpluses, and the National Debt

Money Creation

Monetary Policy

The Phillips Curve and Expectations Theory

International Trade and Finance

Economies in Transition

Growth and the Less-Developed Countries

Applying Graphs to Economics

Consumer Surplus, Producer Surplus, and Market Efficiency

the Self-Correcting Aggregate Demand and Supply Model

Policy Disputes Using the Self-Correcting Aggregate Demand and Supply Model

Filters