Question 1

If fiat money has no value apart from its use as money,how can it be used as a medium of exchange?

Accepted Answer

The most important reason paper currency

Question 2

Which of the following describes the behavior of M1 in recent decades?

Accepted Answer

A)  It soared during the recessions of 1990-91, 2001, and 2007-2009. 
B)  It tended to grow more rapidly than M2. 
C)  It was more stable than M2. 
D)  It has not declined since the 1970s. 
A)  It soared during the recessions of 1990-91, 2001, and 2007-2009. 
B)  It tended to grow more rapidly than M2. 
C)  It was more stable than M2. 
D)  It has not declined since the 1970s.

Question 3

Research has shown that nations with highly independent central banks tend to have low

Accepted Answer

A)  inflation. 
B)  interest rates. 
C)  economic growth. 
D)  unemployment. 
A)  inflation. 
B)  interest rates. 
C)  economic growth. 
D)  unemployment.

Question 4

The payments system is

Accepted Answer

A)  the mechanism for conducting economic transactions. 
B)  another name for the system of foreign exchange rates. 
C)  the phrase used to describe how transactions are carried out in an economy that does not use money. 
D)  the way in which economic transactions are carried out in a government-controlled economy, such as the former Soviet Union. 
A)  the mechanism for conducting economic transactions. 
B)  another name for the system of foreign exchange rates. 
C)  the phrase used to describe how transactions are carried out in an economy that does not use money. 
D)  the way in which economic transactions are carried out in a government-controlled economy, such as the former Soviet Union.

Question 5

What is normally the ultimate cause of hyperinflation?

Accepted Answer

The ultimate cause of hyperinflation is

Question 6

How does the existence of money affect economic growth?

Accepted Answer

It reduces transactions costs

Question 7

All of the following are problems associated with commodity money EXCEPT

Accepted Answer

A)  it is a cumbersome form of payments system. 
B)  commodities tend to have little value in and of themselves. 
C)  its value is dependent on its purity. 
D)  costs are incurred in certifying the purity and weight of commodity money. 
A)  it is a cumbersome form of payments system. 
B)  commodities tend to have little value in and of themselves. 
C)  its value is dependent on its purity. 
D)  costs are incurred in certifying the purity and weight of commodity money.

Question 8

According to the quantity theory of money,if the long-run economic growth rate is 2.5%,by how much should the Fed increase the money supply if it wants inflation to be 2%?

Accepted Answer

A)  0.5% 
B)  1.25% 
C)  4.5% 
D)  5% 
A)  0.5% 
B)  1.25% 
C)  4.5% 
D)  5%

Question 9

Suppose $100 buys less in the year 2017 than in 2000.Then we can say that

Accepted Answer

A)  money's store of value has decreased. 
B)  money's store of value has increased. 
C)  the economy must have been growing rapidly between 2000 and 2017. 
D)  the economy must have been growing slowly between 2000 and 2017. 
A)  money's store of value has decreased. 
B)  money's store of value has increased. 
C)  the economy must have been growing rapidly between 2000 and 2017. 
D)  the economy must have been growing slowly between 2000 and 2017.

Question 10

Hyperinflations are usually caused by large budget deficits financed by

Accepted Answer

A)  selling bonds to private investors. 
B)  selling bonds to the central bank. 
C)  raising taxes. 
D)  borrowing from commercial banks. 
A)  selling bonds to private investors. 
B)  selling bonds to the central bank. 
C)  raising taxes. 
D)  borrowing from commercial banks.

Question 11

Which of the following is NOT included in M1?

Accepted Answer

A)  currency 
B)  savings account deposits 
C)  checking account deposits 
D)  traveler's checks 
A)  currency 
B)  savings account deposits 
C)  checking account deposits 
D)  traveler's checks

Question 12

What does research suggest as to the relationship between the independence of the central bank and inflation? What is the rationale for this relationship?

Accepted Answer

Research indicates that the more indepen

Question 13

Which of the following is NOT a problem with barter?

Accepted Answer

A)  Each good has multiple prices. 
B)  high transactions costs 
C)  the commodity money having value for other uses besides money 
D)  lack of standardization of products exchanged 
A)  Each good has multiple prices. 
B)  high transactions costs 
C)  the commodity money having value for other uses besides money 
D)  lack of standardization of products exchanged

Question 14

Suppose nominal GDP is $14 trillion and the money supply is $2 trillion.What is the velocity of money?

Accepted Answer

A)  0.143 
B)  7 
C)  12 
D)  28 
A)  0.143 
B)  7 
C)  12 
D)  28

Question 15

Under a system of barter

Accepted Answer

A)  each individual trades output directly with another. 
B)  only agricultural goods may be traded. 
C)  goods may be traded for money, but money may not be traded for goods. 
D)  currency is accepted for purchases, but personal checks are not. 
A)  each individual trades output directly with another. 
B)  only agricultural goods may be traded. 
C)  goods may be traded for money, but money may not be traded for goods. 
D)  currency is accepted for purchases, but personal checks are not.

Question 16

Which function of money enhances the ability of households to accumulate wealth?

Accepted Answer

A)  medium of exchange 
B)  store of value 
C)  valuable relative to its weight 
D)  does not become worn out too quickly 
A)  medium of exchange 
B)  store of value 
C)  valuable relative to its weight 
D)  does not become worn out too quickly

Question 17

A person's earnings over a period of time is known as

Accepted Answer

A)  money. 
B)  income. 
C)  wealth. 
D)  all of the above. 
A)  money. 
B)  income. 
C)  wealth. 
D)  all of the above.

Question 18

What is the difference between money,income,and wealth?

Accepted Answer

Income is equal to a person's earnings o

Question 19

Which criterion for suitability as a medium of exchange do Federal Reserve Notes meet?

Accepted Answer

A)  They are of standardized quality. 
B)  They are durable. 
C)  They are acceptable to most traders. 
D)  Federal Reserve Notes meet all of the criteria for suitability as a medium of exchange. 
A)  They are of standardized quality. 
B)  They are durable. 
C)  They are acceptable to most traders. 
D)  Federal Reserve Notes meet all of the criteria for suitability as a medium of exchange.

Question 20

The introduction of money to an economy results in

Accepted Answer

A)  higher incomes. 
B)  higher productivity. 
C)  increased specialization. 
D)  all of the above. 
A)  higher incomes. 
B)  higher productivity. 
C)  increased specialization. 
D)  all of the above.

If fiat money has no value apart from its use as money,how can it be used as a medium of exchange?

Which of the following describes the behavior of M1 in recent decades?

Research has shown that nations with highly independent central banks tend to have low

The payments system is

What is normally the ultimate cause of hyperinflation?

How does the existence of money affect economic growth?

All of the following are problems associated with commodity money EXCEPT

According to the quantity theory of money,if the long-run economic growth rate is 2.5%,by how much should the Fed increase the money supply if it wants inflation to be 2%?

Suppose $100 buys less in the year 2017 than in 2000.Then we can say that

Hyperinflations are usually caused by large budget deficits financed by

Which of the following is NOT included in M1?

What does research suggest as to the relationship between the independence of the central bank and inflation? What is the rationale for this relationship?

Which of the following is NOT a problem with barter?

Suppose nominal GDP is $14 trillion and the money supply is $2 trillion.What is the velocity of money?

Under a system of barter

Which function of money enhances the ability of households to accumulate wealth?

A person's earnings over a period of time is known as

What is the difference between money,income,and wealth?

Which criterion for suitability as a medium of exchange do Federal Reserve Notes meet?

The introduction of money to an economy results in

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

If fiat money has no value apart from its use as money,how can it be used as a medium of exchange?

Which of the following describes the behavior of M1 in recent decades?

Research has shown that nations with highly independent central banks tend to have low

The payments system is

What is normally the ultimate cause of hyperinflation?

How does the existence of money affect economic growth?

All of the following are problems associated with commodity money EXCEPT

According to the quantity theory of money,if the long-run economic growth rate is 2.5%,by how much should the Fed increase the money supply if it wants inflation to be 2%?

Suppose $100 buys less in the year 2017 than in 2000.Then we can say that

Hyperinflations are usually caused by large budget deficits financed by

Which of the following is NOT included in M1?

What does research suggest as to the relationship between the independence of the central bank and inflation? What is the rationale for this relationship?

Which of the following is NOT a problem with barter?

Suppose nominal GDP is $14 trillion and the money supply is $2 trillion.What is the velocity of money?

Under a system of barter

Which function of money enhances the ability of households to accumulate wealth?

A person's earnings over a period of time is known as

What is the difference between money,income,and wealth?

Which criterion for suitability as a medium of exchange do Federal Reserve Notes meet?

The introduction of money to an economy results in

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