Question 1

Barter involves the exchange of:

Accepted Answer

A) goods for gold 
B) goods for silver 
C) gold for silver 
D) goods and services 
A) goods for gold 
B) goods for silver 
C) gold for silver 
D) goods and services

Question 2

Which of the following statements is most correct?

Accepted Answer

A) Both gold and silver have now been completely removed from any monetary role in the U.S.economy. 
B) Savings deposits and small time deposits at depository institutions constitute part of the M1 money supply definition. 
C) Fiat money is gold coins issued by central banks under authority of the government. 
D) The monetary system of the United States today is based on a dollar standard,and the dollar can be converted into gold. 
A) Both gold and silver have now been completely removed from any monetary role in the U.S.economy. 
B) Savings deposits and small time deposits at depository institutions constitute part of the M1 money supply definition. 
C) Fiat money is gold coins issued by central banks under authority of the government. 
D) The monetary system of the United States today is based on a dollar standard,and the dollar can be converted into gold.

Question 3

The velocity of money measures the rate of circulation of the money supply and can be expressed by the following equation (note: GDP = gross domestic product and MS = money supply):

Accepted Answer

A) VM = GDP/MS 
B) VM = MS/GDP 
C) VM = MS x GDP 
D) all of the above 
E) none of the above 
A) VM = GDP/MS 
B) VM = MS/GDP 
C) VM = MS x GDP 
D) all of the above 
E) none of the above

Question 4

The faster velocity of money,the greater an economy's GDP.

Accepted Answer

A) True 
 B)False

Question 5

The function of money that expresses prices and contracts for deferred payments in terms of the monetary unit is referred to as:

Accepted Answer

A) store of purchasing power 
B) standard of value 
C) medium of exchange 
D) credit money 
A) store of purchasing power 
B) standard of value 
C) medium of exchange 
D) credit money

Question 6

Which of the following statements is false?

Accepted Answer

A) Money can always function as a store of purchasing power,even if its value is relatively unstable. 
B) The ease with which an asset can be exchanged for money or other assets is referred to as liquidity. 
C) Credit money is any circulating medium which has little intrinsic value relative to its monetary value. 
D) In the future,electronic funds transfer systems may be used to such an extent that a virtually checkless society may result. 
A) Money can always function as a store of purchasing power,even if its value is relatively unstable. 
B) The ease with which an asset can be exchanged for money or other assets is referred to as liquidity. 
C) Credit money is any circulating medium which has little intrinsic value relative to its monetary value. 
D) In the future,electronic funds transfer systems may be used to such an extent that a virtually checkless society may result.

Question 7

The role of financial markets in a country's financial system is to accumulate and invest savings.

Accepted Answer

A) True 
 B)False

Question 8

The two basic components of the U.S.money supply are physical money and deposit money.

Accepted Answer

A) True 
 B)False

Question 9

Fiat money is:

Accepted Answer

A) paper money issued by central banks with full metallic backing 
B) government notes representing a specific amount of gold in storage 
C) full-bodied money 
D) none of the above 
A) paper money issued by central banks with full metallic backing 
B) government notes representing a specific amount of gold in storage 
C) full-bodied money 
D) none of the above

Question 10

Which of the following are not included in M1?

Accepted Answer

A) negotiable orders of withdrawal 
B) automatic transfer service accounts 
C) money market deposit accounts 
D) credit union share draft accounts 
A) negotiable orders of withdrawal 
B) automatic transfer service accounts 
C) money market deposit accounts 
D) credit union share draft accounts

Question 11

The U.S.dollar was defined in terms of gold until the 1980s.

Accepted Answer

A) True 
 B)False

Question 12

Creating and transferring money are integral parts of the:

Accepted Answer

A) investment process 
B) capital formation process 
C) savings process 
D) none of the above 
A) investment process 
B) capital formation process 
C) savings process 
D) none of the above

Question 13

The use of "continentals" led to a long period of distrust of paper money.

Accepted Answer

A) True 
 B)False

Question 14

Travelers' checks are included in which of the following money supply definitions?

Accepted Answer

A) M1 
B) M2 
C) M3 
D) all of the above 
A) M1 
B) M2 
C) M3 
D) all of the above

Question 15

____________ provide predetermined credit limits to consumers at the time the cards are issued.

Accepted Answer

A) debit cards 
B) ATM cards 
C) credit cards 
D) none of the above 
A) debit cards 
B) ATM cards 
C) credit cards 
D) none of the above

Question 16

Overnight repurchase agreements are not included in which of the following definition of the money supply?

Accepted Answer

A) M1 
B) M2 
C) M3 
D) all of the above 
A) M1 
B) M2 
C) M3 
D) all of the above

Question 17

A central bank defines and regulates the amount of the money supply in the financial system.

Accepted Answer

A) True 
 B)False

Question 18

Money market funds are not included in which of the following definitions of the money supply?

Accepted Answer

A) M1 
B) M2 
C) M3 
D) M4 or L 
A) M1 
B) M2 
C) M3 
D) M4 or L

Question 19

No other asset is as liquid as money,because money is itself,a medium of exchange.

Accepted Answer

A) True 
 B)False

Question 20

_____________ are very short-term loans,usually with maturities of one day to one week made between depository institutions.

Accepted Answer

A) Overnight loans 
B) Commercial paper 
C) Federal funds 
D) A banker's acceptance 
E) none of the above 
A) Overnight loans 
B) Commercial paper 
C) Federal funds 
D) A banker's acceptance 
E) none of the above

Barter involves the exchange of:

Which of the following statements is most correct?

The velocity of money measures the rate of circulation of the money supply and can be expressed by the following equation (note: GDP = gross domestic product and MS = money supply):

The faster velocity of money,the greater an economy's GDP.

The function of money that expresses prices and contracts for deferred payments in terms of the monetary unit is referred to as:

Which of the following statements is false?

The role of financial markets in a country's financial system is to accumulate and invest savings.

The two basic components of the U.S.money supply are physical money and deposit money.

Fiat money is:

Which of the following are not included in M1?

The U.S.dollar was defined in terms of gold until the 1980s.

Creating and transferring money are integral parts of the:

The use of "continentals" led to a long period of distrust of paper money.

Travelers' checks are included in which of the following money supply definitions?

____________ provide predetermined credit limits to consumers at the time the cards are issued.

Overnight repurchase agreements are not included in which of the following definition of the money supply?

A central bank defines and regulates the amount of the money supply in the financial system.

Money market funds are not included in which of the following definitions of the money supply?

No other asset is as liquid as money,because money is itself,a medium of exchange.

_____________ are very short-term loans,usually with maturities of one day to one week made between depository institutions.

The Financial Environment

Banks and Other Financial Institutions

Federal Reserve System

Policy Makers and the Money Supply

International Finance and Trade

Savings and Investment Process

Interest Rates

Time Value of Money

Bonds and Stocks: Characteristics and Valuation

Securities Markets

Financial Return and Risk Concepts

Business Organization and Financial Data

Financial Analysis and Long-Term Financial Planning

Managing Working Capital

Short-Term Business Financing

Capital Budgeting Analysis

Capital Structure and the Cost of Capital

Filters

Exam 2: Money and the Monetary System

Barter involves the exchange of:

Which of the following statements is most correct?

The velocity of money measures the rate of circulation of the money supply and can be expressed by the following equation (note: GDP = gross domestic product and MS = money supply):

The faster velocity of money,the greater an economy's GDP.

The function of money that expresses prices and contracts for deferred payments in terms of the monetary unit is referred to as:

Which of the following statements is false?

The role of financial markets in a country's financial system is to accumulate and invest savings.

The two basic components of the U.S.money supply are physical money and deposit money.

Fiat money is:

Which of the following are not included in M1?

The U.S.dollar was defined in terms of gold until the 1980s.

Creating and transferring money are integral parts of the:

The use of "continentals" led to a long period of distrust of paper money.

Travelers' checks are included in which of the following money supply definitions?

____________ provide predetermined credit limits to consumers at the time the cards are issued.

Overnight repurchase agreements are not included in which of the following definition of the money supply?

A central bank defines and regulates the amount of the money supply in the financial system.

Money market funds are not included in which of the following definitions of the money supply?

No other asset is as liquid as money,because money is itself,a medium of exchange.

_____________ are very short-term loans,usually with maturities of one day to one week made between depository institutions.

The Financial Environment

Banks and Other Financial Institutions

Federal Reserve System

Policy Makers and the Money Supply

International Finance and Trade

Savings and Investment Process

Interest Rates

Time Value of Money

Bonds and Stocks: Characteristics and Valuation

Securities Markets

Financial Return and Risk Concepts

Business Organization and Financial Data

Financial Analysis and Long-Term Financial Planning

Managing Working Capital

Short-Term Business Financing

Capital Budgeting Analysis

Capital Structure and the Cost of Capital

Filters