Question 1

Which of the following statements are correct?

Accepted Answer

A) debit cards provide for the immediate direct transfer of deposit accounts 
B) debit cards may be used for cash advances, even when there is not sufficient money in the account 
C) debit cards may not be used to make cash withdrawals from automatic teller machines 
D) all the above 
E) none of the above 
A) debit cards provide for the immediate direct transfer of deposit accounts 
B) debit cards may be used for cash advances, even when there is not sufficient money in the account 
C) debit cards may not be used to make cash withdrawals from automatic teller machines 
D) all the above 
E) none of the above

Question 2

All Money must perform the following basic functions EXCEPT:

Accepted Answer

A) guarantee of validity 
B) medium of exchange 
C) standard of value 
D) store of value 
A) guarantee of validity 
B) medium of exchange 
C) standard of value 
D) store of value

Question 3

Fiat money is a form of credit money.

Accepted Answer

A) True 
 B)False

Question 4

Coining money and determining its value has been a governmental function in some cultures for about:

Accepted Answer

A) 3,000 years 
B) 2,500 years 
C) 1,900 years 
D) 1,000 years 
A) 3,000 years 
B) 2,500 years 
C) 1,900 years 
D) 1,000 years

Question 5

____________ is anything generally accepted as a means of paying for goods and services and for paying off debts.It must be easily divisible, so that exchanges can take place in small or large quantities; relatively inexpensive to store and transfer; and reasonably stable in value over time.

Accepted Answer

A) A financial asset 
B) A real asset 
C) money 
D) all of the above 
E) none of the above 
A) A financial asset 
B) A real asset 
C) money 
D) all of the above 
E) none of the above

Question 6

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

Accepted Answer

A) Money market mutual funds (MMMFs) 
B) Corporations 
C) Insurance companies 
D) none of the above 
A) Money market mutual funds (MMMFs) 
B) Corporations 
C) Insurance companies 
D) none of the above

Question 7

The three functions of money are:

Accepted Answer

A) medium of exchange, store of value, and measure of liquidity 
B) conduit for international trade, store of value, and standard of value 
C) medium of exchange, store of value, and standard of value 
D) inflation hedge, measure of liquidity, and medium of exchange 
A) medium of exchange, store of value, and measure of liquidity 
B) conduit for international trade, store of value, and standard of value 
C) medium of exchange, store of value, and standard of value 
D) inflation hedge, measure of liquidity, and medium of exchange

Question 8

Credit card usage:

Accepted Answer

A) may expand money supply 
B) may contract the money supply 
C) neither expands nor contracts money supply 
D) none of the above 
A) may expand money supply 
B) may contract the money supply 
C) neither expands nor contracts money supply 
D) none of the above

Question 9

Which of the following statements is false?

Accepted Answer

A) M1, M2, and M3 include demand deposits and other checkable deposits. 
B) Term repurchase agreements are included in M3, but not in M1 and M2. 
C) U.S.savings bonds are included in M3, but not in M1 and M2. 
D) Travelers' checks are included in M1, M2, and M3. 
A) M1, M2, and M3 include demand deposits and other checkable deposits. 
B) Term repurchase agreements are included in M3, but not in M1 and M2. 
C) U.S.savings bonds are included in M3, but not in M1 and M2. 
D) Travelers' checks are included in M1, M2, and M3.

Question 10

The only paper money of significance in the economy today is:

Accepted Answer

A) silver certificates 
B) demand deposits 
C) greenbacks 
D) Federal Reserve notes 
A) silver certificates 
B) demand deposits 
C) greenbacks 
D) Federal Reserve notes

Question 11

Checks may be cleared by:

Accepted Answer

A) the Federal Reserve 
B) banks in the banking system 
C) both the above 
D) neither the above 
A) the Federal Reserve 
B) banks in the banking system 
C) both the above 
D) neither the above

Question 12

Physical money includes coin and currency.

Accepted Answer

A) True 
 B)False

Question 13

If the money supply for an economy is $3 trillion and the velocity of money is 4.5, then GDP is:

Accepted Answer

A) 	$0.67 trillion 
B) 	$1.5 trillion 
C) 	$7.5 trillion 
D) 	$13.5 trillion 
A) 	$0.67 trillion 
B) 	$1.5 trillion 
C) 	$7.5 trillion 
D) 	$13.5 trillion

Question 14

Which of the following statements about greenbacks is false?

Accepted Answer

A) Greenbacks were money issued by the U.S.government to help finance the Civil War. 
B) Greenbacks were fiat money. 
C) Greenbacks were not redeemable for gold or silver. 
D) All of the above statements are correct. 
A) Greenbacks were money issued by the U.S.government to help finance the Civil War. 
B) Greenbacks were fiat money. 
C) Greenbacks were not redeemable for gold or silver. 
D) All of the above statements are correct.

Question 15

Legal tender proclaimed to be money by law is called:

Accepted Answer

A) 	representative money 
B) 	fiat money 
C) 	representative full-bodied money 
D) 	none of the above 
A) 	representative money 
B) 	fiat money 
C) 	representative full-bodied money 
D) 	none of the above

Question 16

The bimetallic standard was difficult to maintain because the market ratio between silver and gold changed constantly.

Accepted Answer

A) True 
 B)False

Question 17

Fiat money is:

Accepted Answer

A) representative full-bodied money 
B) full-bodied money 
C) legal tender proclaimed to be money by law 
D) all of the above 
A) representative full-bodied money 
B) full-bodied money 
C) legal tender proclaimed to be money by law 
D) all of the above

Question 18

Inflation reflects a rise in prices whether or not that rise in prices is offset by an increase in quality.

Accepted Answer

A) True 
 B)False

Question 19

The two basic components of the U.S.money supply are physical money and deposit money.

Accepted Answer

A) True 
 B)False

Question 20

A rise in prices that is fully 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

Which of the following statements are correct?

All Money must perform the following basic functions EXCEPT:

Fiat money is a form of credit money.

Coining money and determining its value has been a governmental function in some cultures for about:

____________ is anything generally accepted as a means of paying for goods and services and for paying off debts.It must be easily divisible, so that exchanges can take place in small or large quantities; relatively inexpensive to store and transfer; and reasonably stable in value over time.

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

The three functions of money are:

Credit card usage:

Which of the following statements is false?

The only paper money of significance in the economy today is:

Checks may be cleared by:

Physical money includes coin and currency.

If the money supply for an economy is $3 trillion and the velocity of money is 4.5, then GDP is:

Which of the following statements about greenbacks is false?

Legal tender proclaimed to be money by law is called:

The bimetallic standard was difficult to maintain because the market ratio between silver and gold changed constantly.

Fiat money is:

Inflation reflects a rise in prices whether or not that rise in prices is offset by an increase in quality.

The two basic components of the U.S.money supply are physical money and deposit money.

A rise in prices that is fully offset by increases in quality is called:

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

Which of the following statements are correct?

All Money must perform the following basic functions EXCEPT:

Fiat money is a form of credit money.

Coining money and determining its value has been a governmental function in some cultures for about:

____________ is anything generally accepted as a means of paying for goods and services and for paying off debts.It must be easily divisible, so that exchanges can take place in small or large quantities; relatively inexpensive to store and transfer; and reasonably stable in value over time.

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

The three functions of money are:

Credit card usage:

Which of the following statements is false?

The only paper money of significance in the economy today is:

Checks may be cleared by:

Physical money includes coin and currency.

If the money supply for an economy is $3 trillion and the velocity of money is 4.5, then GDP is:

Which of the following statements about greenbacks is false?

Legal tender proclaimed to be money by law is called:

The bimetallic standard was difficult to maintain because the market ratio between silver and gold changed constantly.

Fiat money is:

Inflation reflects a rise in prices whether or not that rise in prices is offset by an increase in quality.

The two basic components of the U.S.money supply are physical money and deposit money.

A rise in prices that is fully offset by increases in quality is called:

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