Question 1

By designating Federal Reserve currency as legal tender,the federal government

Accepted Answer

A)  has ensured that Federal Reserve currency will serve as money. 
B)  has guaranteed that Federal Reserve currency may be exchanged for an equivalent amount of gold or silver. 
C)  has mandated that Federal Reserve currency be accepted for payment of debts. 
D)  has mandated that Federal Reserve currency be accepted by citizens of foreign countries in exchange for their countries' currencies. 
A)  has ensured that Federal Reserve currency will serve as money. 
B)  has guaranteed that Federal Reserve currency may be exchanged for an equivalent amount of gold or silver. 
C)  has mandated that Federal Reserve currency be accepted for payment of debts. 
D)  has mandated that Federal Reserve currency be accepted by citizens of foreign countries in exchange for their countries' currencies.

Question 2

As of May 2016,the amount of money as measured by M2 was about

Accepted Answer

A)  $880 billion. 
B)  $3.2 trillion. 
C)  $12.7 trillion. 
D)  $16 trillion. 
A)  $880 billion. 
B)  $3.2 trillion. 
C)  $12.7 trillion. 
D)  $16 trillion.

Question 3

Which of the following statements about ACH transactions is FALSE?

Accepted Answer

A)  They reduce the likelihood of missed payments. 
B)  They reduce transactions costs associated with check processing. 
C)  They reduce the costs that lenders incur in notifying customers of missed payments. 
D)  They typically involve digital cash. 
A)  They reduce the likelihood of missed payments. 
B)  They reduce transactions costs associated with check processing. 
C)  They reduce the costs that lenders incur in notifying customers of missed payments. 
D)  They typically involve digital cash.

Question 4

According to the equation of exchange,if nominal GDP increases then

Accepted Answer

A)  the quantity of money must also increase. 
B)  the velocity of money must also increase. 
C)  both the quantity of money and the velocity of money must also increase. 
D)  either the quantity of money and/or the velocity of money must also increase. 
A)  the quantity of money must also increase. 
B)  the velocity of money must also increase. 
C)  both the quantity of money and the velocity of money must also increase. 
D)  either the quantity of money and/or the velocity of money must also increase.

Question 5

In Sweden,cash accounts for ________ of transactions.

Accepted Answer

A)  only about 2 percent 
B)  about 10 percent 
C)  approximately 40 percent 
D)  just under 90 percent 
A)  only about 2 percent 
B)  about 10 percent 
C)  approximately 40 percent 
D)  just under 90 percent

Question 6

When an economy relies on specialization

Accepted Answer

A)  the economy will generally produce only one product. 
B)  the economy will usually be heavily agricultural. 
C)  each individual in the economy produces the goods or services for which he or she has relatively the best ability. 
D)  each individual will be assigned by the government to produce that good or service the government believes the economy should specialize in. 
A)  the economy will generally produce only one product. 
B)  the economy will usually be heavily agricultural. 
C)  each individual in the economy produces the goods or services for which he or she has relatively the best ability. 
D)  each individual will be assigned by the government to produce that good or service the government believes the economy should specialize in.

Question 7

Other assets are inferior to money in the sense that

Accepted Answer

A)  they increase in value more slowly than does money. 
B)  they have a lower overall return than money. 
C)  they are more vulnerable to losing their real value as inflation increases. 
D)  they generate transactions costs when they are exchanged for money. 
A)  they increase in value more slowly than does money. 
B)  they have a lower overall return than money. 
C)  they are more vulnerable to losing their real value as inflation increases. 
D)  they generate transactions costs when they are exchanged for money.

Question 8

Which of the following is an example of a barter transaction?

Accepted Answer

A)  An individual pays her electric bill with a check. 
B)  An individual pays her electric bill with currency. 
C)  An individual provides three light bulbs to her neighbor in exchange for two gallons of milk. 
D)  An individual deposits three twenty-dollar bills in her checking account. 
A)  An individual pays her electric bill with a check. 
B)  An individual pays her electric bill with currency. 
C)  An individual provides three light bulbs to her neighbor in exchange for two gallons of milk. 
D)  An individual deposits three twenty-dollar bills in her checking account.

Question 9

Which of the following makes up the largest share of M2?

Accepted Answer

A)  M1 
B)  savings deposits 
C)  small time deposits 
D)  money market mutual fund shares 
A)  M1 
B)  savings deposits 
C)  small time deposits 
D)  money market mutual fund shares

Question 10

In comparing money to shares of Apple stock,we can say that

Accepted Answer

A)  money is a store of value, but shares of Apple stock are not. 
B)  shares of Apple stock are a store of value, but money is not. 
C)  both money and shares of Apple stock are stores of value. 
D)  neither money nor shares of Apple stock are stores of value. 
A)  money is a store of value, but shares of Apple stock are not. 
B)  shares of Apple stock are a store of value, but money is not. 
C)  both money and shares of Apple stock are stores of value. 
D)  neither money nor shares of Apple stock are stores of value.

Question 11

When economists refer to the role of money as a unit of account,they mean that

Accepted Answer

A)  most accounting systems reflect that goods are purchased with currency. 
B)  most accounting systems reflect that goods are purchased with checks. 
C)  money gives traders a way of measuring value in the economy. 
D)  money makes it possible for specialization to take place. 
A)  most accounting systems reflect that goods are purchased with currency. 
B)  most accounting systems reflect that goods are purchased with checks. 
C)  money gives traders a way of measuring value in the economy. 
D)  money makes it possible for specialization to take place.

Question 12

Money as a medium of exchange refers only to

Accepted Answer

A)  currency. 
B)  gold coins. 
C)  anything that is generally accepted as payment for goods and services. 
D)  checks at commercial banks. 
A)  currency. 
B)  gold coins. 
C)  anything that is generally accepted as payment for goods and services. 
D)  checks at commercial banks.

Question 13

More than three-quarters of the value of all U.S.currency consists of

Accepted Answer

A)  $1 bills. 
B)  $20 bills. 
C)  $50 bills. 
D)  $100 bills. 
A)  $1 bills. 
B)  $20 bills. 
C)  $50 bills. 
D)  $100 bills.

Question 14

Checks are

Accepted Answer

A)  not acceptable for settling transactions in most industrialized countries. 
B)  less important than currency as a means of settling transactions. 
C)  promises to pay, on demand, money deposited with a financial institution. 
D)  promises to pay, on demand, coins minted from precious metals. 
A)  not acceptable for settling transactions in most industrialized countries. 
B)  less important than currency as a means of settling transactions. 
C)  promises to pay, on demand, money deposited with a financial institution. 
D)  promises to pay, on demand, coins minted from precious metals.

Question 15

Why has M2 grown more quickly than M1 in recent decades?

Accepted Answer

A)  Currency in circulation has declined. 
B)  People own more shares of stock than in the past. 
C)  The amount of funds in CDs and money market mutual funds shares has grown faster than currency or checking deposits. 
D)  Most people use debit cards instead of checking accounts. 
A)  Currency in circulation has declined. 
B)  People own more shares of stock than in the past. 
C)  The amount of funds in CDs and money market mutual funds shares has grown faster than currency or checking deposits. 
D)  Most people use debit cards instead of checking accounts.

Question 16

As of late 2016,approximately what portion of U.S.currency is held outside of the United States?

Accepted Answer

A)  1/10 
B)  1/3 
C)  1/2 
D)  2/3 
A)  1/10 
B)  1/3 
C)  1/2 
D)  2/3

Question 17

In a barter system individuals

Accepted Answer

A)  find it impossible to specialize. 
B)  must be entirely self-sufficient. 
C)  find it difficult to specialize, but may be able to do so. 
D)  will almost invariably specialize. 
A)  find it impossible to specialize. 
B)  must be entirely self-sufficient. 
C)  find it difficult to specialize, but may be able to do so. 
D)  will almost invariably specialize.

Question 18

What are the five characteristics that make an asset suitable to be used as a medium of exchange?

Accepted Answer

It must be acceptable to most people; st

Question 19

Money eliminates the need for

Accepted Answer

A)  any government role in the economy. 
B)  specialization. 
C)  people to have a double coincidence of wants. 
D)  the market system. 
A)  any government role in the economy. 
B)  specialization. 
C)  people to have a double coincidence of wants. 
D)  the market system.

Question 20

Make use of the quantity theory of money to solve the following problem.If the Fed has an inflation target of 2% and the velocity of money is constant,by how much should it increase the money supply each year if economic growth is expected to average 3%?

Accepted Answer

Since the percent change in th

By designating Federal Reserve currency as legal tender,the federal government

As of May 2016,the amount of money as measured by M2 was about

Which of the following statements about ACH transactions is FALSE?

According to the equation of exchange,if nominal GDP increases then

In Sweden,cash accounts for ________ of transactions.

When an economy relies on specialization

Other assets are inferior to money in the sense that

Which of the following is an example of a barter transaction?

Which of the following makes up the largest share of M2?

In comparing money to shares of Apple stock,we can say that

When economists refer to the role of money as a unit of account,they mean that

Money as a medium of exchange refers only to

More than three-quarters of the value of all U.S.currency consists of

Checks are

Why has M2 grown more quickly than M1 in recent decades?

As of late 2016,approximately what portion of U.S.currency is held outside of the United States?

In a barter system individuals

What are the five characteristics that make an asset suitable to be used as a medium of exchange?

Money eliminates the need for

Make use of the quantity theory of money to solve the following problem.If the Fed has an inflation target of 2% and the velocity of money is constant,by how much should it increase the money supply each year if economic growth is expected to average 3%?

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

By designating Federal Reserve currency as legal tender,the federal government

As of May 2016,the amount of money as measured by M2 was about

Which of the following statements about ACH transactions is FALSE?

According to the equation of exchange,if nominal GDP increases then

In Sweden,cash accounts for ________ of transactions.

When an economy relies on specialization

Other assets are inferior to money in the sense that

Which of the following is an example of a barter transaction?

Which of the following makes up the largest share of M2?

In comparing money to shares of Apple stock,we can say that

When economists refer to the role of money as a unit of account,they mean that

Money as a medium of exchange refers only to

More than three-quarters of the value of all U.S.currency consists of

Checks are

Why has M2 grown more quickly than M1 in recent decades?

As of late 2016,approximately what portion of U.S.currency is held outside of the United States?

In a barter system individuals

What are the five characteristics that make an asset suitable to be used as a medium of exchange?

Money eliminates the need for

Make use of the quantity theory of money to solve the following problem.If the Fed has an inflation target of 2% and the velocity of money is constant,by how much should it increase the money supply each year if economic growth is expected to average 3%?

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