Question 1

Other assets are inferior to money in the sense that

Accepted Answer

A)  they increase in value more slowly than does money. 
B)  they have a lower overall return than money. 
C)  they are more vulnerable to losing their real value as inflation increases. 
D)  they generate transactions costs when they are exchanged for money. 
A)  they increase in value more slowly than does money. 
B)  they have a lower overall return than money. 
C)  they are more vulnerable to losing their real value as inflation increases. 
D)  they generate transactions costs when they are exchanged for money.

Question 2

When prices rise,the purchasing power of money

Accepted Answer

A)  rises. 
B)  falls. 
C)  is unaffected. 
D)  may rise, fall, or be unaffected depending upon circumstances. 
A)  rises. 
B)  falls. 
C)  is unaffected. 
D)  may rise, fall, or be unaffected depending upon circumstances.

Question 3

By designating Federal Reserve currency as legal tender,the federal government

Accepted Answer

A)  has ensured that Federal Reserve currency will serve as money. 
B)  has guaranteed that Federal Reserve currency may be exchanged for an equivalent amount of gold or silver. 
C)  has mandated that Federal Reserve currency be accepted for payment of debts. 
D)  has mandated that Federal Reserve currency be accepted by citizens of foreign countries in exchange for their countries' currencies. 
A)  has ensured that Federal Reserve currency will serve as money. 
B)  has guaranteed that Federal Reserve currency may be exchanged for an equivalent amount of gold or silver. 
C)  has mandated that Federal Reserve currency be accepted for payment of debts. 
D)  has mandated that Federal Reserve currency be accepted by citizens of foreign countries in exchange for their countries' currencies.

Question 4

Why do individuals hold money when it does not provide the services that,say,a house does?

Accepted Answer

A)  Money is the most liquid asset. 
B)  Money is the only form in which wealth may be held. 
C)  Money increases in value faster than other assets. 
D)  Money is useful in avoiding taxes on certain transactions. 
A)  Money is the most liquid asset. 
B)  Money is the only form in which wealth may be held. 
C)  Money increases in value faster than other assets. 
D)  Money is useful in avoiding taxes on certain transactions.

Question 5

Fiat money

Accepted Answer

A)  is money that would have no value if it were not usable as money. 
B)  is illegal in most advanced, industrial countries. 
C)  is usually some type of precious metal. 
D)  will generally be accepted in trade for less than its face value. 
A)  is money that would have no value if it were not usable as money. 
B)  is illegal in most advanced, industrial countries. 
C)  is usually some type of precious metal. 
D)  will generally be accepted in trade for less than its face value.

Question 6

Which of the following is included in M1,but not in M2?

Accepted Answer

A)  currency 
B)  checking account deposits 
C)  travelers checks 
D)  Everything in M1 is in M2. 
A)  currency 
B)  checking account deposits 
C)  travelers checks 
D)  Everything in M1 is in M2.

Question 7

Wealth is

Accepted Answer

A)  the sum of the value of assets. 
B)  equal to income. 
C)  a flow variable. 
D)  the sum of the value of assets minus value of liabilities. 
A)  the sum of the value of assets. 
B)  equal to income. 
C)  a flow variable. 
D)  the sum of the value of assets minus value of liabilities.

Question 8

Money is a medium of exchange in that

Accepted Answer

A)  money is generally accepted for buying and selling goods and services. 
B)  currency may be exchanged for gold at any national bank. 
C)  other assets may be better or worse in facilitating exchange than money. 
D)  it must maintain most of its value over time. 
A)  money is generally accepted for buying and selling goods and services. 
B)  currency may be exchanged for gold at any national bank. 
C)  other assets may be better or worse in facilitating exchange than money. 
D)  it must maintain most of its value over time.

Question 9

Fundamentally,to reap the benefits of specialization,an economy must

Accepted Answer

A)  be heavily industrial. 
B)  be heavily agricultural. 
C)  have an extensive system of higher education. 
D)  develop ways for individuals to trade goods with one another. 
A)  be heavily industrial. 
B)  be heavily agricultural. 
C)  have an extensive system of higher education. 
D)  develop ways for individuals to trade goods with one another.

Question 10

In Moscow in 1989,what were taxi drivers using as a medium of exchange?

Accepted Answer

A)  Russian rubles 
B)  Marlboro cigarettes 
C)  gold coins 
D)  caviar 
A)  Russian rubles 
B)  Marlboro cigarettes 
C)  gold coins 
D)  caviar

Question 11

The use of checks in transactions

Accepted Answer

A)  entails lower information costs than the use of currency. 
B)  entails fewer steps than settling transactions with currency. 
C)  avoids the cost of shipping currency back and forth. 
D)  entails lower information and fewer steps than settling transactions with currency. 
A)  entails lower information costs than the use of currency. 
B)  entails fewer steps than settling transactions with currency. 
C)  avoids the cost of shipping currency back and forth. 
D)  entails lower information and fewer steps than settling transactions with currency.

Question 12

Suppose $100 buys less in the year 2011 than in 2000.Then we can say that

Accepted Answer

A)  money's store of value has decreased. 
B)  money's store of value has increased. 
C)  the economy must have been growing rapidly between 2000 and 2011. 
D)  the economy must have been growing slowly between 2000 and 2011. 
A)  money's store of value has decreased. 
B)  money's store of value has increased. 
C)  the economy must have been growing rapidly between 2000 and 2011. 
D)  the economy must have been growing slowly between 2000 and 2011.

Question 13

Make use of the quantity equation to answer the following problem.If the Fed increases the money supply by 4%,velocity increases by 1%,and economic growth is 3%,by how much will the price level increase?

Accepted Answer

Since the percent change in the money su

Question 14

Which of the following is an example of fiat money?

Accepted Answer

A)  A cowry shell used as money on a South Pacific island. 
B)  A gold coin used as money in nineteenth century England. 
C)  A Federal Reserve Note used as money in the twenty-first century United States. 
D)  A pound of salt used as money in medieval France. 
A)  A cowry shell used as money on a South Pacific island. 
B)  A gold coin used as money in nineteenth century England. 
C)  A Federal Reserve Note used as money in the twenty-first century United States. 
D)  A pound of salt used as money in medieval France.

Question 15

In July 2010,what was the total value of US currency in circulation?

Accepted Answer

A)  $500 million 
B)  $150 billion 
C)  $886 billion 
D)  $6 trillion 
A)  $500 million 
B)  $150 billion 
C)  $886 billion 
D)  $6 trillion

Question 16

Under a system of barter

Accepted Answer

A)  each individual trades output directly with another. 
B)  only agricultural goods may be traded. 
C)  goods may be traded for money, but money may not be traded for goods. 
D)  currency is accepted for purchases, but personal checks are not. 
A)  each individual trades output directly with another. 
B)  only agricultural goods may be traded. 
C)  goods may be traded for money, but money may not be traded for goods. 
D)  currency is accepted for purchases, but personal checks are not.

Question 17

Money eliminates the need for

Accepted Answer

A)  any government role in the economy. 
B)  specialization. 
C)  people to have a double coincidence of wants. 
D)  the market system. 
A)  any government role in the economy. 
B)  specialization. 
C)  people to have a double coincidence of wants. 
D)  the market system.

Question 18

Money market deposit accounts are included in

Accepted Answer

A)  only M1. 
B)  only M2. 
C)  M1 and M2. 
D)  neither M1 nor M2. 
A)  only M1. 
B)  only M2. 
C)  M1 and M2. 
D)  neither M1 nor M2.

Question 19

As of July 2010,the amount of money as measured by M2 was about

Accepted Answer

A)  $880 billion. 
B)  $1700 billion. 
C)  $8600 billion. 
D)  $14 trillion. 
A)  $880 billion. 
B)  $1700 billion. 
C)  $8600 billion. 
D)  $14 trillion.

Question 20

The American Civil War lasted from the spring of 1861 to the spring of 1865.During the war the Confederate government issued substantial amounts of fiat paper currency.What do you think happened to the price level (measured in Confederate dollars)in the Confederate states during the final months of the war?

Accepted Answer

During the final months of the war,the i

Other assets are inferior to money in the sense that

When prices rise,the purchasing power of money

By designating Federal Reserve currency as legal tender,the federal government

Why do individuals hold money when it does not provide the services that,say,a house does?

Fiat money

Which of the following is included in M1,but not in M2?

Wealth is

Money is a medium of exchange in that

Fundamentally,to reap the benefits of specialization,an economy must

In Moscow in 1989,what were taxi drivers using as a medium of exchange?

The use of checks in transactions

Suppose $100 buys less in the year 2011 than in 2000.Then we can say that

Make use of the quantity equation to answer the following problem.If the Fed increases the money supply by 4%,velocity increases by 1%,and economic growth is 3%,by how much will the price level increase?

Which of the following is an example of fiat money?

In July 2010,what was the total value of US currency in circulation?

Under a system of barter

Money eliminates the need for

Money market deposit accounts are included in

As of July 2010,the amount of money as measured by M2 was about

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

Other assets are inferior to money in the sense that

When prices rise,the purchasing power of money

By designating Federal Reserve currency as legal tender,the federal government

Why do individuals hold money when it does not provide the services that,say,a house does?

Fiat money

Which of the following is included in M1,but not in M2?

Wealth is

Money is a medium of exchange in that

Fundamentally,to reap the benefits of specialization,an economy must

In Moscow in 1989,what were taxi drivers using as a medium of exchange?

The use of checks in transactions

Suppose $100 buys less in the year 2011 than in 2000.Then we can say that

Make use of the quantity equation to answer the following problem.If the Fed increases the money supply by 4%,velocity increases by 1%,and economic growth is 3%,by how much will the price level increase?

Which of the following is an example of fiat money?

In July 2010,what was the total value of US currency in circulation?

Under a system of barter

Money eliminates the need for

Money market deposit accounts are included in

As of July 2010,the amount of money as measured by M2 was about

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