Exam 2: Money and the Monetary System

The velocity of money measures the rate of circulation of the money supply and can be expressed by the following equation (note: GDP = gross domestic product and MS = money supply):

Which of the following statements is false?

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

A major factor in the severity of the 2007-09 financial crisis was the massive reduction in the level of debt taken on by:

Money is perfectly liquid.

Representative full-bodied money is paper money that is backed by an amount of precious metal equal in value to the face amount of the paper money.

Money decreed to be "legal tender" for the payment of debts is money backed by:

Travelers' checks are included in which of the following money supply definitions?

The supply of a currency in international markets depends largely on the:

No other asset is as liquid as money, because money is itself, a medium of exchange.

The U.S.dollar was defined in terms of gold until the 1980s.

Paper money fully backed by a precious metal and issued by the government is called:

Most of the financial assets added to the M2 definition of money supply provide their owners with a higher rate of return than do M1 financial assets.

_______________________issue shares to customers and invest the proceeds in highly liquid, very-short-maturity, interest-bearing debt instruments called money market investments.

_____________ are very short-term loans, usually with maturities of one day to one week made between depository institutions.

A major objective of the Fed is to regulate and control the supply of money and the availability of credit.

Money is anything generally accepted as a means of paying for goods and services and for paying off debts.

Functions of money include all of the following EXCEPT:

Credit money includes:

A store of purchasing power is the most important function of money.