Question 1

All of the following were took place during the German hyperinflation in the 1920s EXCEPT

Accepted Answer

A) banks reduced lending. 
B) some banks only made loans to customers who agreed to repay in terms of foreign currencies or commodities. 
C) Deutsche Bank had to lay off many workers due to lack of business. 
D) households and firms increased their demand for loans. 
A) banks reduced lending. 
B) some banks only made loans to customers who agreed to repay in terms of foreign currencies or commodities. 
C) Deutsche Bank had to lay off many workers due to lack of business. 
D) households and firms increased their demand for loans. C

Question 2

What criteria should be used in deciding the best definition of the money supply?

Accepted Answer

The answer depends on the purpose of the measurement. Economists are primarily interested in the relation between monetary aggregates and other economic variables, such as output, the price level, and interest rates. In this respect, a monetary aggregate is most useful when it is most closely related to these economic variables. Until the 1980s, M1 was the most widely accepted measure of the money supply. In the 1980s and 1990s, M2 has been most widely accepted.

Question 3

According to the quantity theory of money, the growth rate of which of the following is zero?

Accepted Answer

A) money supply 
B) velocity 
C) real GDP 
D) price level 
A) money supply 
B) velocity 
C) real GDP 
D) price level B

Question 4

Commodity money can best be described as

Accepted Answer

A) money used to purchase agricultural products 
B) a good used as money that also has value independent of its use as money 
C) standardized goods like gold that trade in a financial market 
D) the form of money used in a barter system 
A) money used to purchase agricultural products 
B) a good used as money that also has value independent of its use as money 
C) standardized goods like gold that trade in a financial market 
D) the form of money used in a barter system

Question 5

Which of the following is NOT a significant cost that a barter system imposes on an economy?

Accepted Answer

A) Many prices must be maintained for each good. 
B) Only agricultural goods may be traded. 
C) Specialization of labor is hindered. 
D) The costs arising from the problem of finding two people who each want what the other produces. 
A) Many prices must be maintained for each good. 
B) Only agricultural goods may be traded. 
C) Specialization of labor is hindered. 
D) The costs arising from the problem of finding two people who each want what the other produces.

Question 6

The purchasing power of money

Accepted Answer

A) rises when prices fall. 
B) rises when prices rise. 
C) is set by the Fed in January of each year. 
D) is constant. 
A) rises when prices fall. 
B) rises when prices rise. 
C) is set by the Fed in January of each year. 
D) is constant.

Question 7

If money is declared to be legal tender, it must be

Accepted Answer

A) minted from a precious metal. 
B) acceptable to citizens of foreign countries. 
C) possible to exchange it for an equivalent amount of precious metal. 
D) accepted to settle private transactions and it must be used in paying taxes. 
A) minted from a precious metal. 
B) acceptable to citizens of foreign countries. 
C) possible to exchange it for an equivalent amount of precious metal. 
D) accepted to settle private transactions and it must be used in paying taxes.

Question 8

The narrowest money measure is

Accepted Answer

A) currency plus non-interest bearing checking accounts. 
B) currency plus all checking accounts. 
C) currency plus all deposits at financial institutions. 
D) definitive money. 
A) currency plus non-interest bearing checking accounts. 
B) currency plus all checking accounts. 
C) currency plus all deposits at financial institutions. 
D) definitive money.

Question 9

Which of the following is NOT included in M2?

Accepted Answer

A) currency 
B) savings bonds 
C) money market deposit accounts 
D) overnight repurchase agreements 
A) currency 
B) savings bonds 
C) money market deposit accounts 
D) overnight repurchase agreements

Question 10

Evidence indicates that there's a strong relationship between money and inflation in:

Accepted Answer

A) both the short and long run 
B) neither the short nor the long run 
C) short run, but not the long run 
D) long run, but not the short run 
A) both the short and long run 
B) neither the short nor the long run 
C) short run, but not the long run 
D) long run, but not the short run

Question 11

Which of the following is an example of a barter transaction?

Accepted Answer

A) An individual pays her electric bill with a check. 
B) An individual pays her electric bill with currency. 
C) An individual provides three light bulbs to her neighbor in exchange for two gallons of milk. 
D) An individual deposits three twenty-dollar bills in her checking account. 
A) An individual pays her electric bill with a check. 
B) An individual pays her electric bill with currency. 
C) An individual provides three light bulbs to her neighbor in exchange for two gallons of milk. 
D) An individual deposits three twenty-dollar bills in her checking account.

Question 12

Which of the following statements is true about M2?

Accepted Answer

A) Its total value is smaller than that of M1. 
B) Apart from those assets also included in M1, it includes no assets that offer check-writing features. 
C) Its total value is about five times as large as M1. 
D) It includes large-denomination time deposits. 
A) Its total value is smaller than that of M1. 
B) Apart from those assets also included in M1, it includes no assets that offer check-writing features. 
C) Its total value is about five times as large as M1. 
D) It includes large-denomination time deposits.

Question 13

The payments system is

Accepted Answer

A) the mechanism for conducting economic transactions. 
B) another name for the system of foreign exchange rates. 
C) the phrase used to describe how transactions are carried out in an economy that does not use money. 
D) the way in which economic transactions are carried out in a government-controlled economy, such as the former Soviet Union. 
A) the mechanism for conducting economic transactions. 
B) another name for the system of foreign exchange rates. 
C) the phrase used to describe how transactions are carried out in an economy that does not use money. 
D) the way in which economic transactions are carried out in a government-controlled economy, such as the former Soviet Union.

Question 14

The difference between money and income is that whereas income is an individual's

Accepted Answer

A) flow of earnings over a period of time, money is an individual's stock of currency and currency substitutes. 
B) stock of all assets, money is an individual's stock of currency and currency substitutes. 
C) flow of earnings over a period of time, money is an individual's stock of all assets. 
D) stock of currency and currency substitutes, money is an individual's stock of all assets. 
A) flow of earnings over a period of time, money is an individual's stock of currency and currency substitutes. 
B) stock of all assets, money is an individual's stock of currency and currency substitutes. 
C) flow of earnings over a period of time, money is an individual's stock of all assets. 
D) stock of currency and currency substitutes, money is an individual's stock of all assets.

Question 15

In comparing money to shares of Apple stock, we can say that

Accepted Answer

A) money is a store of value, but shares of Apple stock are not. 
B) shares of Apple stock are a store of value, but money is not. 
C) both money and shares of Apple stock are stores of value. 
D) neither money nor shares of Apple stock are stores of value. 
A) money is a store of value, but shares of Apple stock are not. 
B) shares of Apple stock are a store of value, but money is not. 
C) both money and shares of Apple stock are stores of value. 
D) neither money nor shares of Apple stock are stores of value.

Question 16

Suppose $100 buys less in the year 2013 than in 2000. Then we can say that

Accepted Answer

A) money's store of value has decreased. 
B) money's store of value has increased. 
C) the economy must have been growing rapidly between 2000 and 2013. 
D) the economy must have been growing slowly between 2000 and 2013. 
A) money's store of value has decreased. 
B) money's store of value has increased. 
C) the economy must have been growing rapidly between 2000 and 2013. 
D) the economy must have been growing slowly between 2000 and 2013.

Question 17

Automatic teller machines and debit cards are examples of

Accepted Answer

A) electronic funds transfer systems. 
B) commodity monies. 
C) legal tender in the United States. 
D) modern barter systems. 
A) electronic funds transfer systems. 
B) commodity monies. 
C) legal tender in the United States. 
D) modern barter systems.

Question 18

Under a system of barter

Accepted Answer

A) each individual trades output directly with another. 
B) only agricultural goods may be traded. 
C) goods may be traded for money, but money may not be traded for goods. 
D) currency is accepted for purchases, but personal checks are not. 
A) each individual trades output directly with another. 
B) only agricultural goods may be traded. 
C) goods may be traded for money, but money may not be traded for goods. 
D) currency is accepted for purchases, but personal checks are not.

Question 19

A monetary aggregate is a measure of

Accepted Answer

A) the inflation rate. 
B) the total economic activity of the country. 
C) money broader than currency. 
D) definitive money. 
A) the inflation rate. 
B) the total economic activity of the country. 
C) money broader than currency. 
D) definitive money.

Question 20

What are four inefficiencies of a barter system?

Accepted Answer

Under a barter system, there are several

All of the following were took place during the German hyperinflation in the 1920s EXCEPT

What criteria should be used in deciding the best definition of the money supply?

According to the quantity theory of money, the growth rate of which of the following is zero?

Commodity money can best be described as

Which of the following is NOT a significant cost that a barter system imposes on an economy?

The purchasing power of money

If money is declared to be legal tender, it must be

The narrowest money measure is

Which of the following is NOT included in M2?

Evidence indicates that there's a strong relationship between money and inflation in:

Which of the following is an example of a barter transaction?

Which of the following statements is true about M2?

The payments system is

The difference between money and income is that whereas income is an individual's

In comparing money to shares of Apple stock, we can say that

Suppose $100 buys less in the year 2013 than in 2000. Then we can say that

Automatic teller machines and debit cards are examples of

Under a system of barter

A monetary aggregate is a measure of

What are four inefficiencies of a barter system?

Introducing Money and the Financial System

Interest Rates and Rates of Return

Determining Interest Rates

The Risk Structure and Term Structure of Interest Rates

The Stock Market, Information, and Financial Market Efficiency

Derivatives and Derivative Markets

The Market for Foreign Exchange

Transactions Costs, Asymmetric Information, and the Structure of the Financial System

The Economics of Banking

Investment Banks, Mutual Funds, Hedge Funds, and the Shadow Banking System

Financial Crises and Financial Regulation

The Federal Reserve and Central Banking

The Federal Reserves Balance Sheet and the Money Supply Process

Monetary Policy

The International Financial System and Monetary Policy

Monetary Theory I: The Aggregate Demand and Aggregate Supply Model

Monetary Theory II: The IS-MP Model

Filters

Exam 2: Money and the Payments System

All of the following were took place during the German hyperinflation in the 1920s EXCEPT

What criteria should be used in deciding the best definition of the money supply?

According to the quantity theory of money, the growth rate of which of the following is zero?

Commodity money can best be described as

Which of the following is NOT a significant cost that a barter system imposes on an economy?

The purchasing power of money

If money is declared to be legal tender, it must be

The narrowest money measure is

Which of the following is NOT included in M2?

Evidence indicates that there's a strong relationship between money and inflation in:

Which of the following is an example of a barter transaction?

Which of the following statements is true about M2?

The payments system is

The difference between money and income is that whereas income is an individual's

In comparing money to shares of Apple stock, we can say that

Suppose $100 buys less in the year 2013 than in 2000. Then we can say that

Automatic teller machines and debit cards are examples of

Under a system of barter

A monetary aggregate is a measure of

What are four inefficiencies of a barter system?

Introducing Money and the Financial System

Interest Rates and Rates of Return

Determining Interest Rates

The Risk Structure and Term Structure of Interest Rates

The Stock Market, Information, and Financial Market Efficiency

Derivatives and Derivative Markets

The Market for Foreign Exchange

Transactions Costs, Asymmetric Information, and the Structure of the Financial System

The Economics of Banking

Investment Banks, Mutual Funds, Hedge Funds, and the Shadow Banking System

Financial Crises and Financial Regulation

The Federal Reserve and Central Banking

The Federal Reserves Balance Sheet and the Money Supply Process

Monetary Policy

The International Financial System and Monetary Policy

Monetary Theory I: The Aggregate Demand and Aggregate Supply Model

Monetary Theory II: The IS-MP Model

Filters