Question 1

Which of the following statements about greenbacks is false?

Accepted Answer

A) Greenbacks were money issued by the U.S.government to help finance the Civil War. 
B) Greenbacks were fiat money. 
C) Greenbacks were not redeemable for gold or silver. 
D) All of the above statements are correct. 
A) Greenbacks were money issued by the U.S.government to help finance the Civil War. 
B) Greenbacks were fiat money. 
C) Greenbacks were not redeemable for gold or silver. 
D) All of the above statements are correct.

Question 2

_______________________issue shares to customers and invest the proceeds in highly liquid,very-short-maturity,interest-bearing debt instruments called money market investments.

Accepted Answer

A) Money market mutual funds (MMMFs) 
B) Corporations 
C) Insurance companies 
D) none of the above 
A) Money market mutual funds (MMMFs) 
B) Corporations 
C) Insurance companies 
D) none of the above

Question 3

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 serves as a standard of value. 
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 serves as a standard of value. 
D) All of the above are functions of money.

Question 4

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 5

_____________ 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) Supply Siders 
C) Neo Classicalists 
D) none of the above 
A) Monetarists 
B) Supply Siders 
C) Neo Classicalists 
D) none of the above

Question 6

The monetary system is responsible for carrying out the financial functions of creating and transferring money.

Accepted Answer

A) True 
 B)False

Question 7

A store of purchasing power is the most important function of money.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following describes the basic function of money?

Accepted Answer

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

Question 9

Money is perfectly liquid.

Accepted Answer

A) True 
 B)False

Question 10

The velocity of money measures:

Accepted Answer

A) the quantity of money in an economy 
B) the rate of circulation of the money supply 
C) the level of inflation caused by the money supply 
D) none of the above 
A) the quantity of money in an economy 
B) the rate of circulation of the money supply 
C) the level of inflation caused by the money supply 
D) none of the above

Question 11

Which of the following statements is false?

Accepted Answer

A) The Bretton Wood System of fixed exchange rates was maintained until 1975. 
B) Under the Bretton Wood System,one ounce of gold was set equal to $35. 
C) Under the Bretton Wood System,each participating country had it currency pegged to either gold or the U.S.dollar. 
D) All of the above statements are correct. 
A) The Bretton Wood System of fixed exchange rates was maintained until 1975. 
B) Under the Bretton Wood System,one ounce of gold was set equal to $35. 
C) Under the Bretton Wood System,each participating country had it currency pegged to either gold or the U.S.dollar. 
D) All of the above statements are correct.

Question 12

Because credit card balances and limits can affect the rate of turnover of money supply and contribute to money supply expansion,these balances and limits are included in the M3 definition of money supply.

Accepted Answer

A) True 
 B)False

Question 13

A bimetallic standard is a monetary standard based on two metals,usually silver and gold.

Accepted Answer

A) True 
 B)False

Question 14

Real output in an economy may be expressed as the ratio of _____________.

Accepted Answer

A) GDP to real output 
B) real output to GDP 
C) price level to GDP 
D) GDP to price level 
A) GDP to real output 
B) real output to GDP 
C) price level to GDP 
D) GDP to price level

Question 15

A breakdown in the international gold standard occurred during:

Accepted Answer

A) the 1880-1914 period 
B) World War I 
C) World War II 
D) the depression of the 1930s 
A) the 1880-1914 period 
B) World War I 
C) World War II 
D) the depression of the 1930s

Question 16

____________ is anything generally accepted as a means of paying for goods and services and for paying off debts.It must be easily divisible,so that exchanges can take place in small or large quantities;relatively inexpensive to store and transfer;and reasonably stable in value over time.

Accepted Answer

A) A financial asset 
B) A real asset 
C) money 
D) all of the above 
E) none of the above 
A) A financial asset 
B) A real asset 
C) money 
D) all of the above 
E) none of the above

Question 17

Which of the following would not be considered liquid?

Accepted Answer

A) money in savings accounts 
B) coins 
C) currency 
D) all the above are liquid 
E) none of the above are liquid 
A) money in savings accounts 
B) coins 
C) currency 
D) all the above are liquid 
E) none of the above are liquid

Question 18

A monetary standard based on two metals,usually silver and gold is called:

Accepted Answer

A) full-bodied money 
B) a bimetallic standard 
C) Fiat money 
D) none of the above 
A) full-bodied money 
B) a bimetallic standard 
C) Fiat money 
D) none of the above

Question 19

A major factor in the severity of the 2007-09 financial crisis was the massive reduction in the level of debt taken on by:

Accepted Answer

A) individuals 
B) business 
C) government 
D) all of the above 
E) none of the above 
A) individuals 
B) business 
C) government 
D) all of the above 
E) none of the above

Question 20

Physical money includes coin and currency.

Accepted Answer

A) True 
 B)False

Which of the following statements about greenbacks is false?

_______________________issue shares to customers and invest the proceeds in highly liquid,very-short-maturity,interest-bearing debt instruments called money market investments.

Functions of money include all of the following EXCEPT:

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

_____________ 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 monetary system is responsible for carrying out the financial functions of creating and transferring money.

A store of purchasing power is the most important function of money.

Which of the following describes the basic function of money?

Money is perfectly liquid.

The velocity of money measures:

Which of the following statements is false?

Because credit card balances and limits can affect the rate of turnover of money supply and contribute to money supply expansion,these balances and limits are included in the M3 definition of money supply.

A bimetallic standard is a monetary standard based on two metals,usually silver and gold.

Real output in an economy may be expressed as the ratio of _____________.

A breakdown in the international gold standard occurred during:

____________ is anything generally accepted as a means of paying for goods and services and for paying off debts.It must be easily divisible,so that exchanges can take place in small or large quantities;relatively inexpensive to store and transfer;and reasonably stable in value over time.

Which of the following would not be considered liquid?

A monetary standard based on two metals,usually silver and gold is called:

A major factor in the severity of the 2007-09 financial crisis was the massive reduction in the level of debt taken on by:

Physical money includes coin and currency.

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

Which of the following statements about greenbacks is false?

_______________________issue shares to customers and invest the proceeds in highly liquid,very-short-maturity,interest-bearing debt instruments called money market investments.

Functions of money include all of the following EXCEPT:

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

_____________ 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 monetary system is responsible for carrying out the financial functions of creating and transferring money.

A store of purchasing power is the most important function of money.

Which of the following describes the basic function of money?

Money is perfectly liquid.

The velocity of money measures:

Which of the following statements is false?

Because credit card balances and limits can affect the rate of turnover of money supply and contribute to money supply expansion,these balances and limits are included in the M3 definition of money supply.

A bimetallic standard is a monetary standard based on two metals,usually silver and gold.

Real output in an economy may be expressed as the ratio of _____________.

A breakdown in the international gold standard occurred during:

____________ is anything generally accepted as a means of paying for goods and services and for paying off debts.It must be easily divisible,so that exchanges can take place in small or large quantities;relatively inexpensive to store and transfer;and reasonably stable in value over time.

Which of the following would not be considered liquid?

A monetary standard based on two metals,usually silver and gold is called:

A major factor in the severity of the 2007-09 financial crisis was the massive reduction in the level of debt taken on by:

Physical money includes coin and currency.

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