Question 1

According to the equation of exchange,how can national income grow even though the amount of money does not?

Accepted Answer

A)  price level increases 
B)  real GDP decrease 
C)  velocity increases 
D)  velocity decreases 
A)  price level increases 
B)  real GDP decrease 
C)  velocity increases 
D)  velocity decreases

Question 2

Which of the following is NOT included in M2?

Accepted Answer

A)  currency 
B)  savings bonds 
C)  money market deposit accounts 
D)  overnight repurchase agreements 
A)  currency 
B)  savings bonds 
C)  money market deposit accounts 
D)  overnight repurchase agreements

Question 3

If money is declared to be legal tender,it must be

Accepted Answer

A)  minted from a precious metal. 
B)  acceptable to citizens of foreign countries. 
C)  possible to exchange it for an equivalent amount of precious metal. 
D)  accepted to settle private transactions and it must be used in paying taxes. 
A)  minted from a precious metal. 
B)  acceptable to citizens of foreign countries. 
C)  possible to exchange it for an equivalent amount of precious metal. 
D)  accepted to settle private transactions and it must be used in paying taxes.

Question 4

Why does the payments system continue to change over time?

Accepted Answer

New forms of payments are intr

Question 5

What determines the acceptability of dollar bills as a medium of exchange?

Accepted Answer

A)  Our society's willingness to use green paper notes issued by the Federal Reserve as money. 
B)  The willingness of the Federal Reserve to redeem dollar bills for gold. 
C)  The willingness of the U.S. Treasury to redeem dollar bills for gold. 
D)  The public's fear that failing to accept dollar bills will trigger a hyperinflation. 
A)  Our society's willingness to use green paper notes issued by the Federal Reserve as money. 
B)  The willingness of the Federal Reserve to redeem dollar bills for gold. 
C)  The willingness of the U.S. Treasury to redeem dollar bills for gold. 
D)  The public's fear that failing to accept dollar bills will trigger a hyperinflation.

Question 6

Checks are

Accepted Answer

A)  not acceptable for settling transactions in most industrialized countries. 
B)  less important than currency as a means of settling transactions. 
C)  promises to pay on demand money deposited with a financial institution. 
D)  promises to pay coins minted from precious metals on demand. 
A)  not acceptable for settling transactions in most industrialized countries. 
B)  less important than currency as a means of settling transactions. 
C)  promises to pay on demand money deposited with a financial institution. 
D)  promises to pay coins minted from precious metals on demand.

Question 7

Suppose nominal GDP is $14 trillion and the money supply is $2 trillion.What is the velocity of money?

Accepted Answer

A)  0.143 
B)  7 
C)  12 
D)  28 
A)  0.143 
B)  7 
C)  12 
D)  28

Question 8

Which of the following is NOT included in M1?

Accepted Answer

A)  currency 
B)  savings account deposits 
C)  checking account deposits 
D)  traveler's checks 
A)  currency 
B)  savings account deposits 
C)  checking account deposits 
D)  traveler's checks

Question 9

Which criterion for suitability as a medium of exchange do Federal Reserve Notes meet?

Accepted Answer

A)  They are of standardized quality. 
B)  They are durable. 
C)  They are acceptable to most traders. 
D)  Federal Reserve Notes meet all of the criteria for suitability as a medium of exchange. 
A)  They are of standardized quality. 
B)  They are durable. 
C)  They are acceptable to most traders. 
D)  Federal Reserve Notes meet all of the criteria for suitability as a medium of exchange.

Question 10

Suppose the GDP implicit price deflator was 112.7 in 2011 and 116.0 in 2012.Therefore,the inflation rate in 2012 would be

Accepted Answer

A)  2.8%. 
B)  2.9%. 
C)  3.3%. 
D)  16%. 
A)  2.8%. 
B)  2.9%. 
C)  3.3%. 
D)  16%.

Question 11

A monetary aggregate is a measure of

Accepted Answer

A)  the inflation rate. 
B)  the total economic activity of the country. 
C)  money broader than currency. 
D)  definitive money. 
A)  the inflation rate. 
B)  the total economic activity of the country. 
C)  money broader than currency. 
D)  definitive money.

Question 12

What is normally the ultimate cause of hyperinflation?

Accepted Answer

The ultimate cause of hyperinflation is

Question 13

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 14

If fiat money has no value apart from its use as money,how can it be used as a medium of exchange?

Accepted Answer

The most important reason paper currency

Question 15

What is the most important factor for Federal Reserve currency to be accepted as money?

Accepted Answer

A)  Its acceptance by businesses and households in the United States in exchange for goods and services. 
B)  Its designation as legal tender by the federal government. 
C)  The willingness of the federal government to accept it in exchange for an equivalent amount of gold or silver coins. 
D)  The willingness of foreign businesses and banks to accept it in exchange for goods and services. 
A)  Its acceptance by businesses and households in the United States in exchange for goods and services. 
B)  Its designation as legal tender by the federal government. 
C)  The willingness of the federal government to accept it in exchange for an equivalent amount of gold or silver coins. 
D)  The willingness of foreign businesses and banks to accept it in exchange for goods and services.

Question 16

How many prices would there be in a barter economy with 100 goods?

Accepted Answer

A)  100 
B)  1,000 
C)  4,950 
D)  10,000 
A)  100 
B)  1,000 
C)  4,950 
D)  10,000

Question 17

When economists refer to the role of money as a store of value,they mean that

Accepted Answer

A)  money never loses its value, unlike other assets. 
B)  money allows value to be stored easily. 
C)  the value of money falls only when the quantity of money in circulation falls. 
D)  the value of money falls only when the quantity of money in circulation rises. 
A)  money never loses its value, unlike other assets. 
B)  money allows value to be stored easily. 
C)  the value of money falls only when the quantity of money in circulation falls. 
D)  the value of money falls only when the quantity of money in circulation rises.

Question 18

When an economy relies on specialization,

Accepted Answer

A)  the economy will generally produce only one product. 
B)  the economy will usually be heavily agricultural. 
C)  each individual in the economy produces the goods or services for which he or she has relatively the best ability. 
D)  each individual will be assigned by the government to produce that good or service the government believes the economy should specialize in. 
A)  the economy will generally produce only one product. 
B)  the economy will usually be heavily agricultural. 
C)  each individual in the economy produces the goods or services for which he or she has relatively the best ability. 
D)  each individual will be assigned by the government to produce that good or service the government believes the economy should specialize in.

Question 19

Which of the following is the most efficient means of trade?

Accepted Answer

A)  barter 
B)  money 
C)  government rationing 
D)  the combination of barter with some government rationing 
A)  barter 
B)  money 
C)  government rationing 
D)  the combination of barter with some government rationing

Question 20

The problem of a double coincidence of wants refers to

Accepted Answer

A)  the insatiability of wants in a free market economy. 
B)  poorly-managed companies producing what consumers want only by coincidence. 
C)  the necessity in a barter system of each trading partner wanting what the other has to trade. 
D)  the likelihood that needs will not be the same as wants. 
A)  the insatiability of wants in a free market economy. 
B)  poorly-managed companies producing what consumers want only by coincidence. 
C)  the necessity in a barter system of each trading partner wanting what the other has to trade. 
D)  the likelihood that needs will not be the same as wants.

According to the equation of exchange,how can national income grow even though the amount of money does not?

Which of the following is NOT included in M2?

If money is declared to be legal tender,it must be

Why does the payments system continue to change over time?

What determines the acceptability of dollar bills as a medium of exchange?

Checks are

Suppose nominal GDP is $14 trillion and the money supply is $2 trillion.What is the velocity of money?

Which of the following is NOT included in M1?

Which criterion for suitability as a medium of exchange do Federal Reserve Notes meet?

Suppose the GDP implicit price deflator was 112.7 in 2011 and 116.0 in 2012.Therefore,the inflation rate in 2012 would be

A monetary aggregate is a measure of

What is normally the ultimate cause of hyperinflation?

An asset is

If fiat money has no value apart from its use as money,how can it be used as a medium of exchange?

What is the most important factor for Federal Reserve currency to be accepted as money?

How many prices would there be in a barter economy with 100 goods?

When economists refer to the role of money as a store of value,they mean that

When an economy relies on specialization,

Which of the following is the most efficient means of trade?

The problem of a double coincidence of wants refers to

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

According to the equation of exchange,how can national income grow even though the amount of money does not?

Which of the following is NOT included in M2?

If money is declared to be legal tender,it must be

Why does the payments system continue to change over time?

What determines the acceptability of dollar bills as a medium of exchange?

Checks are

Suppose nominal GDP is $14 trillion and the money supply is $2 trillion.What is the velocity of money?

Which of the following is NOT included in M1?

Which criterion for suitability as a medium of exchange do Federal Reserve Notes meet?

Suppose the GDP implicit price deflator was 112.7 in 2011 and 116.0 in 2012.Therefore,the inflation rate in 2012 would be

A monetary aggregate is a measure of

What is normally the ultimate cause of hyperinflation?

An asset is

If fiat money has no value apart from its use as money,how can it be used as a medium of exchange?

What is the most important factor for Federal Reserve currency to be accepted as money?

How many prices would there be in a barter economy with 100 goods?

When economists refer to the role of money as a store of value,they mean that

When an economy relies on specialization,

Which of the following is the most efficient means of trade?

The problem of a double coincidence of wants refers to

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