Question 1

If the money supply for an economy is $3 trillion and GDP is $10 trillion, then the velocity of money is:

Accepted Answer

A) 	$3.33 trillion 
B) 	$13.0 trillion 
C) 	$7.0 trillion 
D) 	$30 trillion 
A) 	$3.33 trillion 
B) 	$13.0 trillion 
C) 	$7.0 trillion 
D) 	$30 trillion

Question 2

Creating and transferring money are integral parts of the:

Accepted Answer

A) investment process 
B) capital formation process 
C) savings process 
D) none of the above 
A) investment process 
B) capital formation process 
C) savings process 
D) none of the above

Question 3

Which of the following are not included in M1?

Accepted Answer

A) negotiable orders of withdrawal 
B) automatic transfer service accounts 
C) money market deposit accounts 
D) credit union share draft accounts 
A) negotiable orders of withdrawal 
B) automatic transfer service accounts 
C) money market deposit accounts 
D) credit union share draft accounts

Question 4

Inflation reflects a rise in prices not offset by increases in quality.

Accepted Answer

A) True 
 B)False

Question 5

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 6

According to the Bretton Woods agreement, one ounce of gold is set equal to US $35, and each participating country pegs its currency to gold or the U.S.dollar.

Accepted Answer

A) True 
 B)False

Question 7

The M1 definition of the money supply includes which of the following items?

Accepted Answer

A) currency 
B) demand deposits and other checkable deposits at depository institutions 
C) travelers' checks 
D) all of the above 
A) currency 
B) demand deposits and other checkable deposits at depository institutions 
C) travelers' checks 
D) all of the above

Question 8

M1 includes currency and demand deposits but excludes travelers' checks.

Accepted Answer

A) True 
 B)False

Question 9

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

Question 10

The price level of goods and services may be expressed as the ratio of _____________.

Accepted Answer

A) GDP to GNP 
B) real output to GDP 
C) Velocity to GDP 
D) real output to velocity 
E) none of the above 
A) GDP to GNP 
B) real output to GDP 
C) Velocity to GDP 
D) real output to velocity 
E) none of the above

Question 11

____________ accounts are increasingly used to make direct deposits to, and payments from, checkable deposit accounts.

Accepted Answer

A) single balance 
B) money market 
C) automatic transfer service (ATS) 
D) capital market 
E) none of the above 
A) single balance 
B) money market 
C) automatic transfer service (ATS) 
D) capital market 
E) none of the above

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

Fiat money is:

Accepted Answer

A) paper money issued by central banks with full metallic backing 
B) government notes representing a specific amount of gold in storage 
C) full-bodied money 
D) none of the above 
A) paper money issued by central banks with full metallic backing 
B) government notes representing a specific amount of gold in storage 
C) full-bodied money 
D) none of the above

Question 14

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 15

Credit money is backed by:

Accepted Answer

A) gold 
B) silver 
C) creditworthiness of the issuer 
D) creditworthiness of the depository institution 
E) none of the above 
A) gold 
B) silver 
C) creditworthiness of the issuer 
D) creditworthiness of the depository institution 
E) none of the above

Question 16

A ____________ is a short-term debt instrument issued by commercial banks in denominations of $100,000 or more with typical maturities ranging from one month to one year that have an active secondary market that allows short-term investors to easily match their cash or liquidity needs when they arise.

Accepted Answer

A) negotiable certificate of deposit (NC
D)  
B) A repurchase agreement 
C) government bond 
D) money market security 
E) none of the above 
A) negotiable certificate of deposit (NC
D)  
B) A repurchase agreement 
C) government bond 
D) money market security 
E) none of the above

Question 17

Overnight repurchase agreements are not included in which of the following definition of the money supply?

Accepted Answer

A) M1 
B) M2 
C) M3 
D) all of the above 
A) M1 
B) M2 
C) M3 
D) all of the above

Question 18

____________ are debt instruments or securities with maturities of one year or less and have low default risk and high liquidity.

Accepted Answer

A) capital market securities 
B) money market securities 
C) derivative securities 
D) all of the above 
E) none of the above 
A) capital market securities 
B) money market securities 
C) derivative securities 
D) all of the above 
E) none of the above

Question 19

_____________ is a short-term unsecured promissory note issued by a high credit-quality corporation with maturities of one to three months in length with an active secondary money.

Accepted Answer

A) A negotiable certificate of deposit (NC
D)  
B) A repurchase agreement 
C) Commercial paper 
D) Government bond 
E) none of the above 
A) A negotiable certificate of deposit (NC
D)  
B) A repurchase agreement 
C) Commercial paper 
D) Government bond 
E) none of the above

Question 20

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

If the money supply for an economy is $3 trillion and GDP is $10 trillion, then the velocity of money is:

Creating and transferring money are integral parts of the:

Which of the following are not included in M1?

Inflation reflects a rise in prices not offset by increases in quality.

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

According to the Bretton Woods agreement, one ounce of gold is set equal to US $35, and each participating country pegs its currency to gold or the U.S.dollar.

The M1 definition of the money supply includes which of the following items?

M1 includes currency and demand deposits but excludes travelers' checks.

_____________ 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 price level of goods and services may be expressed as the ratio of _____________.

____________ accounts are increasingly used to make direct deposits to, and payments from, checkable deposit accounts.

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

Fiat money is:

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.

Credit money is backed by:

Overnight repurchase agreements are not included in which of the following definition of the money supply?

____________ are debt instruments or securities with maturities of one year or less and have low default risk and high liquidity.

_____________ is a short-term unsecured promissory note issued by a high credit-quality corporation with maturities of one to three months in length with an active secondary money.

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

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

If the money supply for an economy is $3 trillion and GDP is $10 trillion, then the velocity of money is:

Creating and transferring money are integral parts of the:

Which of the following are not included in M1?

Inflation reflects a rise in prices not offset by increases in quality.

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

According to the Bretton Woods agreement, one ounce of gold is set equal to US $35, and each participating country pegs its currency to gold or the U.S.dollar.

The M1 definition of the money supply includes which of the following items?

M1 includes currency and demand deposits but excludes travelers' checks.

_____________ 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 price level of goods and services may be expressed as the ratio of _____________.

____________ accounts are increasingly used to make direct deposits to, and payments from, checkable deposit accounts.

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

Fiat money is:

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.

Credit money is backed by:

Overnight repurchase agreements are not included in which of the following definition of the money supply?

____________ are debt instruments or securities with maturities of one year or less and have low default risk and high liquidity.

_____________ is a short-term unsecured promissory note issued by a high credit-quality corporation with maturities of one to three months in length with an active secondary money.

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

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