Exam 2: Money and the Payments System

As a result of "Check 21-The Check Clearing for the 21^st Century Act":

When the price level increases, the purchasing power of money:

Compare two economies: a barter economy versus an economy that uses money.In order to exchange goods and services:

Money as a means of payment refers to:

The Consumer Price Index (CPI) is:

In a barter economy with "n" number of goods there will always be:

Why are electronic transactions increasingly taking the place of paper transactions?

The fact that U.S.currency is legal tender means:

All of the following are true about electronic funds transfers except:

Money aggregates can best be defined as a set of measures of the amount of:

How many prices would a trader of a particular good need to know in a barter economy with 5 goods?

U.S.currency is:

As an economy produces more different types of goods:

A famous American has been visiting the same tropical island for 15 years for vacations.When she goes she pays for everything by writing checks drawn on her U.S.bank.The currency the natives use are not U.S.dollars; they use a currency called a fungo.The natives never cash her checks.She is so well known on the island that the natives simply trade her checks among themselves.The question you need to answer, complete with an explanation, is: who is paying for her vacation? (You can assume her bank would honor the checks if presented for payment even after a considerable period of time has passed.)

The money aggregate M2 includes:

Which of the following lists correctly orders assets from most liquid to least liquid?

Which of the following is not an example of bartering?

Consider two barter economies: Duos and Varietas.Duos produces two different goods, whereas Varietas produces 80 different goods.Both countries have the same number of people.In which barter economy is it more likely that the means of payment and the units of account would be efficient? How many relative prices are there in Duos compared with Varietas? Which economy would benefit more from adopting money?

Without the use of money, workers in an economy would:

Consider the following: there are two countries, A and B.Each country has the same resources, and produces the same goods.The residents of country A use money; the residents of country B rely on bartering of goods.Will each country produce the same quantity of output? Explain.No, the residents of Country B will definitely spend more of their time transacting, trying to create a double coincidence of wants, and may have to rely on multiple trades to do so.They will also likely specialize less, reducing the gains to the country from specialization.In country A the residents will be able to transact immediately using money, and will also be able to specialize in what they do well creating a more efficient economy.