Question 1

Keynesians believe that when the supply of money exceeds the quantity demanded,the public will spend more rapidly causing inflation.

Accepted Answer

A) True 
 B)False

Question 2

Which are included in the money supply?

Accepted Answer

A) outstanding balances on credit cards 
B) credit card limits 
C) both the above 
D) neither the above 
A) outstanding balances on credit cards 
B) credit card limits 
C) both the above 
D) neither the above

Question 3

Which of the following statements is false?

Accepted Answer

A) M1,M2,and M3 include demand deposits and other checkable deposits. 
B) Term repurchase agreements are included in M3,but not in M1 and M2. 
C) U.S.savings bonds are included in M3,but not in M1 and M2. 
D) Travelers' checks are included in M1,M2,and M3. 
A) M1,M2,and M3 include demand deposits and other checkable deposits. 
B) Term repurchase agreements are included in M3,but not in M1 and M2. 
C) U.S.savings bonds are included in M3,but not in M1 and M2. 
D) Travelers' checks are included in M1,M2,and M3.

Question 4

Fiat money must be backed by a specific amount of gold or silver.

Accepted Answer

A) True 
 B)False

Question 5

According to the Bretton Woods agreement,one ounce of gold is set equal to US $35,and each participating country pegs its currency to gold or the U.S.dollar.

Accepted Answer

A) True 
 B)False

Question 6

Functions of money include all of the following EXCEPT:

Accepted Answer

A) Money serves as a medium of exchange. 
B) Money may be held as a store of value. 
C) Money determines the wealth of a nation. 
D) All of the above are functions of money. 
A) Money serves as a medium of exchange. 
B) Money may be held as a store of value. 
C) Money determines the wealth of a nation. 
D) All of the above are functions of money.

Question 7

Inflation is:

Accepted Answer

A) an increase in the purchasing power of money 
B) a decrease in the quality of goods and services 
C) an increase in the prices of goods and services not offset by increases in the quality of those goods and services 
D) a measure of the money supply 
A) an increase in the purchasing power of money 
B) a decrease in the quality of goods and services 
C) an increase in the prices of goods and services not offset by increases in the quality of those goods and services 
D) a measure of the money supply

Question 8

____________ are debt instruments or securities with maturities of one year or less and have low default risk and high liquidity.

Accepted Answer

A) capital market securities 
B) money market securities 
C) derivative securities 
D) all of the above 
E) none of the above 
A) capital market securities 
B) money market securities 
C) derivative securities 
D) all of the above 
E) none of the above

Question 9

The public's holdings of U.S.savings bonds are included in which of the following money supply definitions?

Accepted Answer

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

Question 10

With a mint ratio of 15 to 1 between gold and silver and a market ratio of 15.5 to 1:

Accepted Answer

A) gold should go out of circulation 
B) silver should go out of circulation 
C) paper money will predominate 
D) the bimetallic standard will be stable 
A) gold should go out of circulation 
B) silver should go out of circulation 
C) paper money will predominate 
D) the bimetallic standard will be stable

Question 11

Credit card usage:

Accepted Answer

A) may expand money supply 
B) may contract the money supply 
C) neither expands nor contracts money supply 
D) none of the above 
A) may expand money supply 
B) may contract the money supply 
C) neither expands nor contracts money supply 
D) none of the above

Question 12

Our monetary standard today is the paper dollar,issued by the Federal Reserve,and can be exchanged for gold or silver.

Accepted Answer

A) True 
 B)False

Question 13

All Money must perform the following basic functions EXCEPT:

Accepted Answer

A) guarantee of validity 
B) medium of exchange 
C) standard of value 
D) store of value 
A) guarantee of validity 
B) medium of exchange 
C) standard of value 
D) store of value

Question 14

"Continentals" were backed by:

Accepted Answer

A) gold 
B) silver 
C) possible future tax revenues 
D) none of the above 
A) gold 
B) silver 
C) possible future tax revenues 
D) none of the above

Question 15

Credit money is backed by:

Accepted Answer

A) gold 
B) silver 
C) creditworthiness of the issuer 
D) creditworthiness of the depository institution 
E) none of the above 
A) gold 
B) silver 
C) creditworthiness of the issuer 
D) creditworthiness of the depository institution 
E) none of the above

Question 16

_____________ believe that a change in the money supply first causes a change in interest rate levels,which,in turn,alters the demand for goods and services.

Accepted Answer

A) Monetarists 
B) Keynesians 
C) Neo Classicalists 
D) none of the above 
A) Monetarists 
B) Keynesians 
C) Neo Classicalists 
D) none of the above

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

Checks may be cleared by:

Accepted Answer

A) the Federal Reserve 
B) banks in the banking system 
C) both the above 
D) neither the above 
A) the Federal Reserve 
B) banks in the banking system 
C) both the above 
D) neither the above

Question 19

Coining money and determining its value has been a governmental function in some cultures?for about:

Accepted Answer

A) 3,000 years 
B) 2,500 years 
C) 1,900 years 
D) 1,000 years 
A) 3,000 years 
B) 2,500 years 
C) 1,900 years 
D) 1,000 years

Question 20

Even though credit card balances and limits are not included in any definition of money supply,these balances and limits can affect the rate of turnover of money supply and contribute to money supply expansion.

Accepted Answer

A) True 
 B)False

Keynesians believe that when the supply of money exceeds the quantity demanded,the public will spend more rapidly causing inflation.

Which are included in the money supply?

Which of the following statements is false?

Fiat money must be backed by a specific amount of gold or silver.

According to the Bretton Woods agreement,one ounce of gold is set equal to US $35,and each participating country pegs its currency to gold or the U.S.dollar.

Functions of money include all of the following EXCEPT:

Inflation is:

____________ are debt instruments or securities with maturities of one year or less and have low default risk and high liquidity.

The public's holdings of U.S.savings bonds are included in which of the following money supply definitions?

With a mint ratio of 15 to 1 between gold and silver and a market ratio of 15.5 to 1:

Credit card usage:

Our monetary standard today is the paper dollar,issued by the Federal Reserve,and can be exchanged for gold or silver.

All Money must perform the following basic functions EXCEPT:

"Continentals" were backed by:

Credit money is backed by:

_____________ believe that a change in the money supply first causes a change in interest rate levels,which,in turn,alters the demand for goods and services.

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

Checks may be cleared by:

Coining money and determining its value has been a governmental function in some cultures?for about:

Even though credit card balances and limits are not included in any definition of money supply,these balances and limits can affect the rate of turnover of money supply and contribute to money supply expansion.

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

Keynesians believe that when the supply of money exceeds the quantity demanded,the public will spend more rapidly causing inflation.

Which are included in the money supply?

Which of the following statements is false?

Fiat money must be backed by a specific amount of gold or silver.

According to the Bretton Woods agreement,one ounce of gold is set equal to US $35,and each participating country pegs its currency to gold or the U.S.dollar.

Functions of money include all of the following EXCEPT:

Inflation is:

____________ are debt instruments or securities with maturities of one year or less and have low default risk and high liquidity.

The public's holdings of U.S.savings bonds are included in which of the following money supply definitions?

With a mint ratio of 15 to 1 between gold and silver and a market ratio of 15.5 to 1:

Credit card usage:

Our monetary standard today is the paper dollar,issued by the Federal Reserve,and can be exchanged for gold or silver.

All Money must perform the following basic functions EXCEPT:

"Continentals" were backed by:

Credit money is backed by:

_____________ believe that a change in the money supply first causes a change in interest rate levels,which,in turn,alters the demand for goods and services.

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

Checks may be cleared by:

Coining money and determining its value has been a governmental function in some cultures?for about:

Even though credit card balances and limits are not included in any definition of money supply,these balances and limits can affect the rate of turnover of money supply and contribute to money supply expansion.

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