Question 1

Functions of money include all of the following EXCEPT:

Accepted Answer

A) 	Money serves as a medium of exchange. 
B) 	Money may be held as a store of value. 
C) 	Money serves as a standard of value. 
D) 	All of the above are functions of money. 
A) 	Money serves as a medium of exchange. 
B) 	Money may be held as a store of value. 
C) 	Money serves as a standard of value. 
D) 	All of the above are functions of money.

Question 2

A rise in prices not offset by increases in quality is called:

Accepted Answer

A) 	deflation 
B) 	inflation 
C) 	stagflation 
D) 	none of the above 
A) 	deflation 
B) 	inflation 
C) 	stagflation 
D) 	none of the above

Question 3

The advantages claimed for a bimetallic standard were not gained in actual practice because:

Accepted Answer

A) one of the metals disappeared from circulation because the mint and market ratios were not the same 
B) the supply of gold was inadequate 
C) the supply of silver and gold was not balanced among the nations that were on a bimetallic standard 
D) all of the above 
A) one of the metals disappeared from circulation because the mint and market ratios were not the same 
B) the supply of gold was inadequate 
C) the supply of silver and gold was not balanced among the nations that were on a bimetallic standard 
D) all of the above

Question 4

Which of the following describes the basic function of money?

Accepted Answer

A) store of purchasing power 
B) standard of value 
C) medium of exchange 
D) liquidity 
A) store of purchasing power 
B) standard of value 
C) medium of exchange 
D) liquidity

Question 5

A measure of the output of goods and services in an economy is called:

Accepted Answer

A) 	output 
B) 	money supply 
C) 	gross domestic product 
D) 	velocity 
A) 	output 
B) 	money supply 
C) 	gross domestic product 
D) 	velocity

Question 6

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

Question 7

The broadest definition of money supply is:

Accepted Answer

A) 	M1 
B) 	M2 
C) 	M3 
D) 	M4 
A) 	M1 
B) 	M2 
C) 	M3 
D) 	M4

Question 8

A bimetallic standard is a monetary standard based only on gold.

Accepted Answer

A) True 
 B)False

Question 9

Large time deposits (over $100,000) are included in which of the following money supply definitions?

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 10

Which of the following statements is false?

Accepted Answer

A) The Bretton Wood System of fixed exchange rates was maintained until 1975. 
B) Under the Bretton Wood System, one ounce of gold was set equal to $35. 
C) Under the Bretton Wood System, each participating country had it currency pegged to either gold or the U.S.dollar. 
D) All of the above statements are correct. 
A) The Bretton Wood System of fixed exchange rates was maintained until 1975. 
B) Under the Bretton Wood System, one ounce of gold was set equal to $35. 
C) Under the Bretton Wood System, each participating country had it currency pegged to either gold or the U.S.dollar. 
D) All of the above statements are correct.

Question 11

Our monetary standard today is the paper dollar, issued by the Federal Reserve, and can be exchanged for gold or silver.

Accepted Answer

A) True 
 B)False

Question 12

The savings-investment process

Accepted Answer

A) involves the transfer of business funds to individuals for investing in stocks and bonds 
B) involves the transfer of business funds to individuals for investing in homes 
C) involves the transfer in individual savings to the Federal Government. 
D) involves the transfer in individual savings to business firms in exchange for their securities. 
A) involves the transfer of business funds to individuals for investing in stocks and bonds 
B) involves the transfer of business funds to individuals for investing in homes 
C) involves the transfer in individual savings to the Federal Government. 
D) involves the transfer in individual savings to business firms in exchange for their securities.

Question 13

A breakdown in the international gold standard occurred during:

Accepted Answer

A) the 1880-1914 period 
B) World War I 
C) World War II 
D) the depression of the 1930s 
A) the 1880-1914 period 
B) World War I 
C) World War II 
D) the depression of the 1930s

Question 14

Currency held in vaults of depository institutions is excluded from M1.

Accepted Answer

A) True 
 B)False

Question 15

Deposit money is backed by the creditworthiness of the depository institution that issued the deposit.

Accepted Answer

A) True 
 B)False

Question 16

When coins have an intrinsic value equal to the value of the metal they contain, they are referred to as:

Accepted Answer

A) full-bodied money 
B) representative full-bodied money 
C) token coins 
D) all of the above 
A) full-bodied money 
B) representative full-bodied money 
C) token coins 
D) all of the above

Question 17

A monetary standard based on two metals, usually silver and gold is called:

Accepted Answer

A) 	full-bodied money 
B) 	a bimetallic standard 
C) 	Fiat money 
D) 	none of the above 
A) 	full-bodied money 
B) 	a bimetallic standard 
C) 	Fiat money 
D) 	none of the above

Question 18

The role of financial markets in a country's financial system is to accumulate and invest savings.

Accepted Answer

A) True 
 B)False

Question 19

Paper money backed by a precious metal is called:

Accepted Answer

A) 	full-bodied money 
B) 	a bimetallic standard 
C) 	representative full-bodied money 
D) 	none of the above 
A) 	full-bodied money 
B) 	a bimetallic standard 
C) 	representative full-bodied money 
D) 	none of the above

Question 20

Demand deposits are issued by commercial banks and savings banks, and do not earn interest.

Accepted Answer

A) True 
 B)False

Functions of money include all of the following EXCEPT:

A rise in prices not offset by increases in quality is called:

The advantages claimed for a bimetallic standard were not gained in actual practice because:

Which of the following describes the basic function of money?

A measure of the output of goods and services in an economy is called:

_____________ 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 broadest definition of money supply is:

A bimetallic standard is a monetary standard based only on gold.

Large time deposits (over $100,000) are included in which of the following money supply definitions?

Which of the following statements is false?

Our monetary standard today is the paper dollar, issued by the Federal Reserve, and can be exchanged for gold or silver.

The savings-investment process

A breakdown in the international gold standard occurred during:

Currency held in vaults of depository institutions is excluded from M1.

Deposit money is backed by the creditworthiness of the depository institution that issued the deposit.

When coins have an intrinsic value equal to the value of the metal they contain, they are referred to as:

A monetary standard based on two metals, usually silver and gold is called:

The role of financial markets in a country's financial system is to accumulate and invest savings.

Paper money backed by a precious metal is called:

Demand deposits are issued by commercial banks and savings banks, and do not earn interest.

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

Functions of money include all of the following EXCEPT:

A rise in prices not offset by increases in quality is called:

The advantages claimed for a bimetallic standard were not gained in actual practice because:

Which of the following describes the basic function of money?

A measure of the output of goods and services in an economy is called:

_____________ 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 broadest definition of money supply is:

A bimetallic standard is a monetary standard based only on gold.

Large time deposits (over $100,000) are included in which of the following money supply definitions?

Which of the following statements is false?

Our monetary standard today is the paper dollar, issued by the Federal Reserve, and can be exchanged for gold or silver.

The savings-investment process

A breakdown in the international gold standard occurred during:

Currency held in vaults of depository institutions is excluded from M1.

Deposit money is backed by the creditworthiness of the depository institution that issued the deposit.

When coins have an intrinsic value equal to the value of the metal they contain, they are referred to as:

A monetary standard based on two metals, usually silver and gold is called:

The role of financial markets in a country's financial system is to accumulate and invest savings.

Paper money backed by a precious metal is called:

Demand deposits are issued by commercial banks and savings banks, and do not earn interest.

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