Question 1

What is the most important factor for Federal Reserve currency to be accepted as money?

Accepted Answer

A)  its acceptance by businesses and households in the United States in exchange for goods and services 
B)  its designation as legal tender by the federal government 
C)  the willingness of the federal government to accept it in exchange for an equivalent amount of gold or silver coins 
D)  the willingness of foreign businesses and banks to accept it in exchange for goods and services 
A)  its acceptance by businesses and households in the United States in exchange for goods and services 
B)  its designation as legal tender by the federal government 
C)  the willingness of the federal government to accept it in exchange for an equivalent amount of gold or silver coins 
D)  the willingness of foreign businesses and banks to accept it in exchange for goods and services

Question 2

Why do individuals hold money when it does NOT provide the services that,say,a house does?

Accepted Answer

A)  Money is the most liquid asset. 
B)  Money is the only form in which wealth may be held. 
C)  Money increases in value faster than other assets. 
D)  Money is useful in avoiding taxes on certain transactions. 
A)  Money is the most liquid asset. 
B)  Money is the only form in which wealth may be held. 
C)  Money increases in value faster than other assets. 
D)  Money is useful in avoiding taxes on certain transactions.

Question 3

Bitcoin is a form of

Accepted Answer

A)  commodity money. 
B)  legal tender. 
C)  e-money. 
D)  all of the above. 
A)  commodity money. 
B)  legal tender. 
C)  e-money. 
D)  all of the above.

Question 4

Automatic teller machines and debit cards are examples of

Accepted Answer

A)  electronic funds transfer systems. 
B)  commodity monies. 
C)  legal tender in the United States. 
D)  modern barter systems. 
A)  electronic funds transfer systems. 
B)  commodity monies. 
C)  legal tender in the United States. 
D)  modern barter systems.

Question 5

Which of the following is a form of e-money?

Accepted Answer

A)  gold 
B)  PayPal 
C)  an American Express card 
D)  traveler's checks 
A)  gold 
B)  PayPal 
C)  an American Express card 
D)  traveler's checks

Question 6

The American Civil War lasted from the spring of 1861 to the spring of 1865.During the war the Confederate government issued substantial amounts of fiat paper currency.What do you think happened to the price level (measured in Confederate dollars)in the Confederate states during the final months of the war?

Accepted Answer

During the final months of the war,the i

Question 7

Money is a medium of exchange in that

Accepted Answer

A)  money is generally accepted for buying and selling goods and services. 
B)  currency may be exchanged for gold at any national bank. 
C)  other assets may be better or worse in facilitating exchange than money. 
D)  it must maintain most of its value over time. 
A)  money is generally accepted for buying and selling goods and services. 
B)  currency may be exchanged for gold at any national bank. 
C)  other assets may be better or worse in facilitating exchange than money. 
D)  it must maintain most of its value over time.

Question 8

Which function of money eliminates the need for multiple prices for each good as in a barter system?

Accepted Answer

A)  store of value 
B)  standard of deferred payment 
C)  unit of account 
D)  valuable relative to its weight 
A)  store of value 
B)  standard of deferred payment 
C)  unit of account 
D)  valuable relative to its weight

Question 9

An asset is

Accepted Answer

A)  the same thing as a liability. 
B)  a thing of value that can be owned. 
C)  money, as opposed to stock or bonds. 
D)  anything that never declines in value. 
A)  the same thing as a liability. 
B)  a thing of value that can be owned. 
C)  money, as opposed to stock or bonds. 
D)  anything that never declines in value.

Question 10

The Fed's current position towards the existing monetary aggregates is

Accepted Answer

A)  it is convinced that M1 is the best measure of the money supply. 
B)  it is convinced that M2 is the best measure of the money supply. 
C)  it is an issue of ongoing research. 
D)  it is reverting to considering currency alone as the best measure of the money supply. 
A)  it is convinced that M1 is the best measure of the money supply. 
B)  it is convinced that M2 is the best measure of the money supply. 
C)  it is an issue of ongoing research. 
D)  it is reverting to considering currency alone as the best measure of the money supply.

Question 11

The problem of a double coincidence of wants refers to

Accepted Answer

A)  the insatiability of wants in a free market economy. 
B)  poorly-managed companies producing what consumers want only by coincidence. 
C)  the necessity in a barter system of each trading partner wanting what the other has to trade. 
D)  the likelihood that needs will not be the same as wants. 
A)  the insatiability of wants in a free market economy. 
B)  poorly-managed companies producing what consumers want only by coincidence. 
C)  the necessity in a barter system of each trading partner wanting what the other has to trade. 
D)  the likelihood that needs will not be the same as wants.

Question 12

What are four inefficiencies of a barter system?

Accepted Answer

Under a barter system,there are several

Question 13

All of the following are true in Sweden EXCEPT

Accepted Answer

A)  many branches of Sweden's banks do not accept cash deposits. 
B)  some stores have stopped accepting cash payments. 
C)  many churches encourage parishioners to make donations using a mobile banking app. 
D)  the government no longer issues paper currency. 
A)  many branches of Sweden's banks do not accept cash deposits. 
B)  some stores have stopped accepting cash payments. 
C)  many churches encourage parishioners to make donations using a mobile banking app. 
D)  the government no longer issues paper currency.

Question 14

Fundamentally,to reap the benefits of specialization,an economy must

Accepted Answer

A)  be heavily industrial. 
B)  be heavily agricultural. 
C)  have an extensive system of higher education. 
D)  develop ways for individuals to trade goods with one another. 
A)  be heavily industrial. 
B)  be heavily agricultural. 
C)  have an extensive system of higher education. 
D)  develop ways for individuals to trade goods with one another.

Question 15

When prices rise,the purchasing power of money

Accepted Answer

A)  rises. 
B)  falls. 
C)  is unaffected. 
D)  may rise, fall, or be unaffected depending upon circumstances. 
A)  rises. 
B)  falls. 
C)  is unaffected. 
D)  may rise, fall, or be unaffected depending upon circumstances.

Question 16

Which of the following is included in M1,but not in M2?

Accepted Answer

A)  currency 
B)  checking account deposits 
C)  travelers checks 
D)  Everything in M1 is in M2. 
A)  currency 
B)  checking account deposits 
C)  travelers checks 
D)  Everything in M1 is in M2.

Question 17

A system of barter has substantial transactions costs because

Accepted Answer

A)  taxes under such a system are generally a large fraction of the value of output. 
B)  traders must spend considerable time searching for trading partners. 
C)  the uncertainties of trade result in high legal fees being incurred to draw up binding contracts. 
D)  the uncertainties of trade result in high insurance premiums. 
A)  taxes under such a system are generally a large fraction of the value of output. 
B)  traders must spend considerable time searching for trading partners. 
C)  the uncertainties of trade result in high legal fees being incurred to draw up binding contracts. 
D)  the uncertainties of trade result in high insurance premiums.

Question 18

The velocity of money can best be described as

Accepted Answer

A)  how quickly prices are increasing. 
B)  how quickly output is increasing. 
C)  the number of times each dollar in the money supply is used to buy goods and services included in GDP. 
D)  the growth rate of the money supply. 
A)  how quickly prices are increasing. 
B)  how quickly output is increasing. 
C)  the number of times each dollar in the money supply is used to buy goods and services included in GDP. 
D)  the growth rate of the money supply.

Question 19

According to the equation of exchange,the money supply times the velocity of money equals the

Accepted Answer

A)  price level. 
B)  growth rate of the money supply. 
C)  real GDP. 
D)  nominal GDP. 
A)  price level. 
B)  growth rate of the money supply. 
C)  real GDP. 
D)  nominal GDP.

Question 20

How many prices would there be in a barter economy with 100 goods?

Accepted Answer

A)  100 
B)  1,000 
C)  4,950 
D)  10,000 
A)  100 
B)  1,000 
C)  4,950 
D)  10,000

What is the most important factor for Federal Reserve currency to be accepted as money?

Why do individuals hold money when it does NOT provide the services that,say,a house does?

Bitcoin is a form of

Automatic teller machines and debit cards are examples of

Which of the following is a form of e-money?

Money is a medium of exchange in that

Which function of money eliminates the need for multiple prices for each good as in a barter system?

An asset is

The Fed's current position towards the existing monetary aggregates is

The problem of a double coincidence of wants refers to

What are four inefficiencies of a barter system?

All of the following are true in Sweden EXCEPT

Fundamentally,to reap the benefits of specialization,an economy must

When prices rise,the purchasing power of money

Which of the following is included in M1,but not in M2?

A system of barter has substantial transactions costs because

The velocity of money can best be described as

According to the equation of exchange,the money supply times the velocity of money equals the

How many prices would there be in a barter economy with 100 goods?

Introducing Money and the Financial System

Interest Rates and Rates of Return

Determining Interest Rates

The Risk Structure and Term Structure of Interest Rates

The Stock Market, information, and Financial Market Efficiency

Derivatives and Derivative Markets

The Market for Foreign Exchange

Transactions Costs, asymmetric Information, and the Structure of the Financial System

The Economics of Banking

Beyond Commercial Banks: Shadow Banks and Nonbank Financial Institutions

Financial Crises and Financial Regulation

The Federal Reserve and Central Banking

The Federal Reserves Balance Sheet and the Money Supply Process

Monetary Policy

The International Financial System and Monetary Policy

Monetary Theory I- the Aggregate Demand and Aggregate Supply Model

Monetary Theory Ii: the Is-Mp Model

Filters

Exam 2: Money and the Payments System

What is the most important factor for Federal Reserve currency to be accepted as money?

Why do individuals hold money when it does NOT provide the services that,say,a house does?

Bitcoin is a form of

Automatic teller machines and debit cards are examples of

Which of the following is a form of e-money?

Money is a medium of exchange in that

Which function of money eliminates the need for multiple prices for each good as in a barter system?

An asset is

The Fed's current position towards the existing monetary aggregates is

The problem of a double coincidence of wants refers to

What are four inefficiencies of a barter system?

All of the following are true in Sweden EXCEPT

Fundamentally,to reap the benefits of specialization,an economy must

When prices rise,the purchasing power of money

Which of the following is included in M1,but not in M2?

A system of barter has substantial transactions costs because

The velocity of money can best be described as

According to the equation of exchange,the money supply times the velocity of money equals the

How many prices would there be in a barter economy with 100 goods?

Introducing Money and the Financial System

Interest Rates and Rates of Return

Determining Interest Rates

The Risk Structure and Term Structure of Interest Rates

The Stock Market, information, and Financial Market Efficiency

Derivatives and Derivative Markets

The Market for Foreign Exchange

Transactions Costs, asymmetric Information, and the Structure of the Financial System

The Economics of Banking

Beyond Commercial Banks: Shadow Banks and Nonbank Financial Institutions

Financial Crises and Financial Regulation

The Federal Reserve and Central Banking

The Federal Reserves Balance Sheet and the Money Supply Process

Monetary Policy

The International Financial System and Monetary Policy

Monetary Theory I- the Aggregate Demand and Aggregate Supply Model

Monetary Theory Ii: the Is-Mp Model

Filters