Question 1

In a fiduciary monetary system

Accepted Answer

A) coins get their value from the precious metals of which they are made. 
B) money gets its value from the confidence that the public has in its acceptability. 
C) paper currency does not have value, but balances in checking accounts do. 
D) checking account balances do not have value, but paper currency does. 
A) coins get their value from the precious metals of which they are made. 
B) money gets its value from the confidence that the public has in its acceptability. 
C) paper currency does not have value, but balances in checking accounts do. 
D) checking account balances do not have value, but paper currency does.

Question 2

Which of the following is NOT one of the functions of money?

Accepted Answer

A) medium of exchange 
B) protection from increases in prices of goods and services 
C) unit of accounting 
D) store of value 
A) medium of exchange 
B) protection from increases in prices of goods and services 
C) unit of accounting 
D) store of value

Question 3

Which of the following is a liability to a bank?

Accepted Answer

A) total reserves 
B) transaction deposits 
C) government securities 
D) loans 
A) total reserves 
B) transaction deposits 
C) government securities 
D) loans

Question 4

When the Fed buys government securities

Accepted Answer

A) reserves increase, leading to a decrease in the money supply by an amount more than the purchase of the government securities. 
B) reserves decrease, leading to a increase in the money supply by an amount more than the purchase of the government securities. 
C) reserves increase, leading to a increase in the money supply by an amount more than the purchase of the government securities. 
D) reserves decrease, leading to a decrease in the money supply by an amount more than the purchase of the government securities. 
A) reserves increase, leading to a decrease in the money supply by an amount more than the purchase of the government securities. 
B) reserves decrease, leading to a increase in the money supply by an amount more than the purchase of the government securities. 
C) reserves increase, leading to a increase in the money supply by an amount more than the purchase of the government securities. 
D) reserves decrease, leading to a decrease in the money supply by an amount more than the purchase of the government securities.

Question 5

The direct exchange of goods and services for other goods and services is known as

Accepted Answer

A) barter. 
B) purchasing power. 
C) intermediation. 
D) wholesale trade. 
A) barter. 
B) purchasing power. 
C) intermediation. 
D) wholesale trade.

Question 6

A "banker's bank" is another name for

Accepted Answer

A) a financial intermediary. 
B) a government bank. 
C) a central bank. 
D) the Federal Depository Insurance Agency. 
A) a financial intermediary. 
B) a government bank. 
C) a central bank. 
D) the Federal Depository Insurance Agency.

Question 7

Money serves as a medium of exchange means that

Accepted Answer

A) it benefits both buyers and sellers. 
B) it reduces transaction costs. 
C) it eliminates the need for barter. 
D) All of the above are correct. 
A) it benefits both buyers and sellers. 
B) it reduces transaction costs. 
C) it eliminates the need for barter. 
D) All of the above are correct.

Question 8

The Federal Open Market Committee has responsibility for

Accepted Answer

A) appointing members to the Board of Governors of the Federal Reserve system. 
B) printing money. 
C) issuing orders to buy or sell government securities for the Fed. 
D) advising the Treasury Department on monetary policy. 
A) appointing members to the Board of Governors of the Federal Reserve system. 
B) printing money. 
C) issuing orders to buy or sell government securities for the Fed. 
D) advising the Treasury Department on monetary policy.

Question 9

Which term below fits closest to money functioning as a unit of accounting?

Accepted Answer

A) medium of exchange 
B) adverse selection 
C) standard of value 
D) liquidity 
A) medium of exchange 
B) adverse selection 
C) standard of value 
D) liquidity

Question 10

When the Fed buys a $10,000 bond from a bond dealer

Accepted Answer

A) reserves of the banking system increase by $10,000, but the money supply will only be able to increase by something less than this amount. 
B) reserves of the banking system increase by $10,000, but the money supply can increase by more than $10,000. 
C) reserves of the banking system remain unchanged, but the money supply increases by $10,000. 
D) reserves of the banking system remain unchanged, but the money supply decreases by $10,000. 
A) reserves of the banking system increase by $10,000, but the money supply will only be able to increase by something less than this amount. 
B) reserves of the banking system increase by $10,000, but the money supply can increase by more than $10,000. 
C) reserves of the banking system remain unchanged, but the money supply increases by $10,000. 
D) reserves of the banking system remain unchanged, but the money supply decreases by $10,000.

Question 11

The likelihood that individuals who seek to borrow money may use the funds for unworthy, high-risk projects is

Accepted Answer

A) asymmetric information. 
B) adverse selection. 
C) moral hazard. 
D) financial intermediation. 
A) asymmetric information. 
B) adverse selection. 
C) moral hazard. 
D) financial intermediation.

Question 12

Money that we have today can be set aside to purchase things in the future. This function of money is known as

Accepted Answer

A) medium of exchange. 
B) unit of accounting. 
C) store of value. 
D) standard of deferred payment. 
A) medium of exchange. 
B) unit of accounting. 
C) store of value. 
D) standard of deferred payment.

Question 13

The opportunity cost of holding a dollar is

Accepted Answer

A) a dollar. 
B) the price of a government bond. 
C) less than a dollar. 
D) the interest yield that could have been earned by holding some other asset. 
A) a dollar. 
B) the price of a government bond. 
C) less than a dollar. 
D) the interest yield that could have been earned by holding some other asset.

Question 14

Small-denomination certificates of deposits are

Accepted Answer

A) included in M1 but not M2. 
B) included in M1 and M2. 
C) included only in M1. 
D) included in M2 but not M1. 
A) included in M1 but not M2. 
B) included in M1 and M2. 
C) included only in M1. 
D) included in M2 but not M1.

Question 15

As a unit of account, money is used

Accepted Answer

A) to define prices of all other goods. 
B) to pay off future debts. 
C) to hold purchasing power over time. 
D) to exchange for goods and services. 
A) to define prices of all other goods. 
B) to pay off future debts. 
C) to hold purchasing power over time. 
D) to exchange for goods and services.

Question 16

-Based on the information in the above table, the value of M1 is

Accepted Answer

A) $2,100. 
B) $1,700. 
C) $3,000. 
D) $3,100. 
A) $2,100. 
B) $1,700. 
C) $3,000. 
D) $3,100.

In a fiduciary monetary system

Which of the following is NOT one of the functions of money?

Which of the following is a liability to a bank?

When the Fed buys government securities

The direct exchange of goods and services for other goods and services is known as

A "banker's bank" is another name for

Money serves as a medium of exchange means that

The Federal Open Market Committee has responsibility for

Which term below fits closest to money functioning as a unit of accounting?

When the Fed buys a $10,000 bond from a bond dealer

The likelihood that individuals who seek to borrow money may use the funds for unworthy, high-risk projects is

Money that we have today can be set aside to purchase things in the future. This function of money is known as

The opportunity cost of holding a dollar is

Small-denomination certificates of deposits are

As a unit of account, money is used

-Based on the information in the above table, the value of M1 is

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

The Macroeconomy: Unemployment, Inflation, and Deflation

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, Real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

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Exam 14: Money Banking and Central Banking

In a fiduciary monetary system

Which of the following is NOT one of the functions of money?

Which of the following is a liability to a bank?

When the Fed buys government securities

The direct exchange of goods and services for other goods and services is known as

A "banker's bank" is another name for

Money serves as a medium of exchange means that

The Federal Open Market Committee has responsibility for

Which term below fits closest to money functioning as a unit of accounting?

When the Fed buys a $10,000 bond from a bond dealer

The likelihood that individuals who seek to borrow money may use the funds for unworthy, high-risk projects is

Money that we have today can be set aside to purchase things in the future. This function of money is known as

The opportunity cost of holding a dollar is

Small-denomination certificates of deposits are

As a unit of account, money is used

-Based on the information in the above table, the value of M1 is

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

The Macroeconomy: Unemployment, Inflation, and Deflation

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, Real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters