Question 1

As of October 2012, the amount of money as measured by M2 was about

Accepted Answer

A) $880 billion. 
B) $1700 billion. 
C) $10.2 trillion. 
D) $14 trillion. 
A) $880 billion. 
B) $1700 billion. 
C) $10.2 trillion. 
D) $14 trillion.

Question 2

How does the existence of money affect economic growth?

Accepted Answer

It reduces transactions costs

Question 3

By "specialization" economists mean a situation where

Accepted Answer

A) individuals produce the goods or services for which they have relatively the best ability. 
B) goods are traded directly for goods and money is not used. 
C) individuals who produce goods do not also produce services and individuals who produce services do not also produce goods. 
D) individuals are assigned to occupations on the basis of tests that gauge their relative abilities. 
A) individuals produce the goods or services for which they have relatively the best ability. 
B) goods are traded directly for goods and money is not used. 
C) individuals who produce goods do not also produce services and individuals who produce services do not also produce goods. 
D) individuals are assigned to occupations on the basis of tests that gauge their relative abilities.

Question 4

Money as a medium of exchange refers only to

Accepted Answer

A) currency. 
B) gold coins. 
C) anything that is generally accepted as payment for goods and services. 
D) checks at commercial banks. 
A) currency. 
B) gold coins. 
C) anything that is generally accepted as payment for goods and services. 
D) checks at commercial banks.

Question 5

Who benefits from rising inflation?

Accepted Answer

A) those who already have fixed-rate loans 
B) those considering taking out a loan 
C) lenders that already made loans 
D) lenders considering whether to make new loans 
A) those who already have fixed-rate loans 
B) those considering taking out a loan 
C) lenders that already made loans 
D) lenders considering whether to make new loans

Question 6

Economic studies have shown that countries that have high inflation rates have lower rates of economic growth than do countries with low inflation rates. Explain what underlies this relationship between inflation and economic growth.

Accepted Answer

In terms of the issues discussed in this

Question 7

Wealth is

Accepted Answer

A) the sum of the value of assets. 
B) equal to income. 
C) a flow variable. 
D) the sum of the value of assets minus value of liabilities. 
A) the sum of the value of assets. 
B) equal to income. 
C) a flow variable. 
D) the sum of the value of assets minus value of liabilities.

Question 8

All of the following are examples of electronic funds EXCEPT

Accepted Answer

A) credit cards. 
B) debit cards. 
C) stored value cards. 
D) e-cash. 
A) credit cards. 
B) debit cards. 
C) stored value cards. 
D) e-cash.

Question 9

What is the difference between money, income, and wealth?

Accepted Answer

Income is equal to a person's earnings o

Question 10

Research has shown that nations with highly independent central banks tend to have low

Accepted Answer

A) inflation. 
B) interest rates. 
C) economic growth. 
D) unemployment. 
A) inflation. 
B) interest rates. 
C) economic growth. 
D) unemployment.

Question 11

What does research suggest as to the relationship between the independence of the central bank and inflation? What is the rationale for this relationship?

Accepted Answer

Research indicates that the more indepen

Question 12

Why has M2 grown more quickly than M1 in recent decades?

Accepted Answer

A) Currency in circulation has declined. 
B) People own more shares of stock than in the past. 
C) The amount of funds in CDs and money market mutual funds shares has grown faster than currency or checking deposits. 
D) Most people use debit cards instead of checking accounts. 
A) Currency in circulation has declined. 
B) People own more shares of stock than in the past. 
C) The amount of funds in CDs and money market mutual funds shares has grown faster than currency or checking deposits. 
D) Most people use debit cards instead of checking accounts.

Question 13

When economists refer to the role of money as a standard of deferred payment, they mean that

Accepted Answer

A) payments by checks are usually deferred until the checks clear the bank. 
B) money earns interest while loan payments are deferred. 
C) money provides a standard for payments that will occur in the future. 
D) money today is worth less than money tomorrow. 
A) payments by checks are usually deferred until the checks clear the bank. 
B) money earns interest while loan payments are deferred. 
C) money provides a standard for payments that will occur in the future. 
D) money today is worth less than money tomorrow.

Question 14

When economists refer to the role of money as a unit of account, they mean that

Accepted Answer

A) most accounting systems reflect that goods are purchased with currency. 
B) most accounting systems reflect that goods are purchased with checks. 
C) money gives traders a way of measuring value in the economy. 
D) money makes it possible for specialization to take place. 
A) most accounting systems reflect that goods are purchased with currency. 
B) most accounting systems reflect that goods are purchased with checks. 
C) money gives traders a way of measuring value in the economy. 
D) money makes it possible for specialization to take place.

Question 15

The Fed's current position towards the existing monetary aggregates is

Accepted Answer

A) it is convinced that M1 is the best measure of the money supply. 
B) it is convinced that M2 is the best measure of the money supply. 
C) it is an issue of ongoing research. 
D) it is reverting to considering currency alone as the best measure of the money supply. 
A) it is convinced that M1 is the best measure of the money supply. 
B) it is convinced that M2 is the best measure of the money supply. 
C) it is an issue of ongoing research. 
D) it is reverting to considering currency alone as the best measure of the money supply.

Question 16

Which of the following statements about ACH transactions is false?

Accepted Answer

A) They reduce the likelihood of missed payments. 
B) They reduce transactions costs associated with check processing. 
C) They reduce the costs that lenders incur in notifying customers of missed payments. 
D) They typically involve digital cash. 
A) They reduce the likelihood of missed payments. 
B) They reduce transactions costs associated with check processing. 
C) They reduce the costs that lenders incur in notifying customers of missed payments. 
D) They typically involve digital cash.

Question 17

Money eliminates the need for

Accepted Answer

A) any government role in the economy. 
B) specialization. 
C) people to have a double coincidence of wants. 
D) the market system. 
A) any government role in the economy. 
B) specialization. 
C) people to have a double coincidence of wants. 
D) the market system.

Question 18

An asset is

Accepted Answer

A) the same thing as a liability. 
B) a thing of value that can be owned. 
C) money, as opposed to stock or bonds. 
D) anything that never declines in value. 
A) the same thing as a liability. 
B) a thing of value that can be owned. 
C) money, as opposed to stock or bonds. 
D) anything that never declines in value.

Question 19

The velocity of money can best be described as

Accepted Answer

A) how quickly prices are increasing. 
B) how quickly output is increasing. 
C) the number of times each dollar in the money supply is used to buy goods and services included in GDP. 
D) the growth rate of the money supply. 
A) how quickly prices are increasing. 
B) how quickly output is increasing. 
C) the number of times each dollar in the money supply is used to buy goods and services included in GDP. 
D) the growth rate of the money supply.

Question 20

Which of the following is an example of a commodity money?

Accepted Answer

A) gold coins 
B) dollar bills 
C) British pound notes 
D) Japanese yen notes 
A) gold coins 
B) dollar bills 
C) British pound notes 
D) Japanese yen notes

As of October 2012, the amount of money as measured by M2 was about

How does the existence of money affect economic growth?

By "specialization" economists mean a situation where

Money as a medium of exchange refers only to

Who benefits from rising inflation?

Economic studies have shown that countries that have high inflation rates have lower rates of economic growth than do countries with low inflation rates. Explain what underlies this relationship between inflation and economic growth.

Wealth is

All of the following are examples of electronic funds EXCEPT

What is the difference between money, income, and wealth?

Research has shown that nations with highly independent central banks tend to have low

What does research suggest as to the relationship between the independence of the central bank and inflation? What is the rationale for this relationship?

Why has M2 grown more quickly than M1 in recent decades?

When economists refer to the role of money as a standard of deferred payment, they mean that

When economists refer to the role of money as a unit of account, they mean that

The Fed's current position towards the existing monetary aggregates is

Which of the following statements about ACH transactions is false?

Money eliminates the need for

An asset is

The velocity of money can best be described as

Which of the following is an example of a commodity money?

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

As of October 2012, the amount of money as measured by M2 was about

How does the existence of money affect economic growth?

By "specialization" economists mean a situation where

Money as a medium of exchange refers only to

Who benefits from rising inflation?

Economic studies have shown that countries that have high inflation rates have lower rates of economic growth than do countries with low inflation rates. Explain what underlies this relationship between inflation and economic growth.

Wealth is

All of the following are examples of electronic funds EXCEPT

What is the difference between money, income, and wealth?

Research has shown that nations with highly independent central banks tend to have low

What does research suggest as to the relationship between the independence of the central bank and inflation? What is the rationale for this relationship?

Why has M2 grown more quickly than M1 in recent decades?

When economists refer to the role of money as a standard of deferred payment, they mean that

When economists refer to the role of money as a unit of account, they mean that

The Fed's current position towards the existing monetary aggregates is

Which of the following statements about ACH transactions is false?

Money eliminates the need for

An asset is

The velocity of money can best be described as

Which of the following is an example of a commodity money?

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