Question 1

Which of the following best illustrates the unit of account function of money?

Accepted Answer

A) You list prices for candy sold on your Web site,www.sweettooth.com,in dollars. 
B) You pay for your theater tickets with dollars. 
C) You hold currency even though you don't intend to spend it right away. 
D) None of the above is correct. 
A) You list prices for candy sold on your Web site,www.sweettooth.com,in dollars. 
B) You pay for your theater tickets with dollars. 
C) You hold currency even though you don't intend to spend it right away. 
D) None of the above is correct. A

Question 2

M1 includes

Accepted Answer

A) small time deposits. 
B) savings deposits. 
C) other checkable deposits. 
D) money market mutual funds. 
A) small time deposits. 
B) savings deposits. 
C) other checkable deposits. 
D) money market mutual funds. C

Question 3

When colonists in Virginia used tobacco as money,their money

Accepted Answer

A) was commodity money. 
B) had no intrinsic value. 
C) was fiat money. 
D) had no store of value. 
A) was commodity money. 
B) had no intrinsic value. 
C) was fiat money. 
D) had no store of value. A

Question 4

Paper dollars

Accepted Answer

A) are commodity money and gold coins are fiat money. 
B) are fiat money and gold coins are commodity money. 
C) and gold coins are both commodity monies. 
D) and gold coins are both fiat monies. 
A) are commodity money and gold coins are fiat money. 
B) are fiat money and gold coins are commodity money. 
C) and gold coins are both commodity monies. 
D) and gold coins are both fiat monies.

Question 5

Fiat money

Accepted Answer

A) has no intrinsic value. 
B) is backed by gold. 
C) is a medium of exchange but not a unit of account. 
D) is any close substitute for currency such as checkable deposits. 
A) has no intrinsic value. 
B) is backed by gold. 
C) is a medium of exchange but not a unit of account. 
D) is any close substitute for currency such as checkable deposits.

Question 6

Jim transfers money from his money market account to his savings account.This action

Accepted Answer

A) reduced M1 and increases M2. 
B) increases M1 and reduces M2. 
C) has no effect on M1 or M2. 
D) increases M1 and M2. 
A) reduced M1 and increases M2. 
B) increases M1 and reduces M2. 
C) has no effect on M1 or M2. 
D) increases M1 and M2.

Question 7

M1 includes

Accepted Answer

A) currency. 
B) demand deposits. 
C) traveler's checks. 
D) All of the above are correct. 
A) currency. 
B) demand deposits. 
C) traveler's checks. 
D) All of the above are correct.

Question 8

Which of the following is included in M1 and M2?

Accepted Answer

A) traveler's checks 
B) savings deposits 
C) money market mutual funds 
D) small time deposits 
A) traveler's checks 
B) savings deposits 
C) money market mutual funds 
D) small time deposits

Question 9

Credit cards

Accepted Answer

A) represent the largest component of M1. 
B) are not included in M1 but are included in M2. 
C) are a form of money unique to the U.S. 
D) are not considered money. 
A) represent the largest component of M1. 
B) are not included in M1 but are included in M2. 
C) are a form of money unique to the U.S. 
D) are not considered money.

Question 10

Given the following information,what are the

Accepted Answer

A) M1 = $4,310 billion,M2 = $6,285 billion. 
B) M1 = $2,050 billion,M2 = $9,985 billion. 
C) M1 = $2,110 billion,M2 = $8,485 billion. 
D) M1 = $3,610 billion,M2 = $9,985 billion. 
A) M1 = $4,310 billion,M2 = $6,285 billion. 
B) M1 = $2,050 billion,M2 = $9,985 billion. 
C) M1 = $2,110 billion,M2 = $8,485 billion. 
D) M1 = $3,610 billion,M2 = $9,985 billion.

Question 11

Demand deposits are a type of

Accepted Answer

A) checking account. 
B) time deposit. 
C) money market mutual fund. 
D) savings deposit. 
A) checking account. 
B) time deposit. 
C) money market mutual fund. 
D) savings deposit.

Question 12

Given the following information,what are the

Accepted Answer

A) M1 = $650 billion,M2 = $2,830 billion. 
B) M1 = $400 billion,M2 = $3,080 billion. 
C) M1 = $680 billion,M2 = $2,800 billion. 
D) M1 = $680 billion,M2 = $3,200 billion. 
A) M1 = $650 billion,M2 = $2,830 billion. 
B) M1 = $400 billion,M2 = $3,080 billion. 
C) M1 = $680 billion,M2 = $2,800 billion. 
D) M1 = $680 billion,M2 = $3,200 billion.

Question 13

John and Jane decide to go on a vacation.As a result,they withdraw $2,500 from their savings account to purchase $2,500 worth of traveler's checks.As a result of these changes,

Accepted Answer

A) M1 increases by $2,500 and M2 decreases by $2,500. 
B) M1 increases by $2,500 and M2 stays the same. 
C) M1 and M2 stay the same. 
D) M1 decreases by $2,500 and M2 increases by $2,500. 
A) M1 increases by $2,500 and M2 decreases by $2,500. 
B) M1 increases by $2,500 and M2 stays the same. 
C) M1 and M2 stay the same. 
D) M1 decreases by $2,500 and M2 increases by $2,500.

Question 14

Economists equate money with

Accepted Answer

A) individual wealth. 
B) income regularly earned. 
C) assets people use regularly to buy goods and services. 
D) individual saving. 
A) individual wealth. 
B) income regularly earned. 
C) assets people use regularly to buy goods and services. 
D) individual saving.

Question 15

Which of the following defer payments?

Accepted Answer

A) credit cards and debit cards 
B) neither credit cards nor debit cards 
C) credit cards but not debit cards 
D) debit cards but not credit cards 
A) credit cards and debit cards 
B) neither credit cards nor debit cards 
C) credit cards but not debit cards 
D) debit cards but not credit cards

Question 16

Paper money

Accepted Answer

A) has a high intrinsic value. 
B) is the primary medium of exchange in a barter economy. 
C) is valuable because it is generally accepted in trade. 
D) is valuable only because of the legal tender requirement. 
A) has a high intrinsic value. 
B) is the primary medium of exchange in a barter economy. 
C) is valuable because it is generally accepted in trade. 
D) is valuable only because of the legal tender requirement.

Question 17

The money stock in the economy is​

Accepted Answer

A) ​the amount of wealth accumulating in the economy,such as currency and demand deposits. 
B) ​the amount of wealth accumulating in the economy,such as money market mutual funds and stocks. 
C) ​the quantity of money circulating in the economy,such as currency and demand deposits. 
D) ​​the quantity of money circulating in the economy,such as money market mutual funds and stocks. 
A) ​the amount of wealth accumulating in the economy,such as currency and demand deposits. 
B) ​the amount of wealth accumulating in the economy,such as money market mutual funds and stocks. 
C) ​the quantity of money circulating in the economy,such as currency and demand deposits. 
D) ​​the quantity of money circulating in the economy,such as money market mutual funds and stocks.

Question 18

Currently,U.S.currency is

Accepted Answer

A) fiat money with intrinsic value. 
B) fiat money with no intrinsic value. 
C) commodity money with intrinsic value. 
D) commodity money with no intrinsic value. 
A) fiat money with intrinsic value. 
B) fiat money with no intrinsic value. 
C) commodity money with intrinsic value. 
D) commodity money with no intrinsic value.

Question 19

Which of the following statements is correct?

Accepted Answer

A) All items that are included in M1 are included also in M2. 
B) All items that are included in M2 are included also in M1. 
C) Credit cards are included in both M1 and M2. 
D) Savings deposits are included in both M1 and M2. 
A) All items that are included in M1 are included also in M2. 
B) All items that are included in M2 are included also in M1. 
C) Credit cards are included in both M1 and M2. 
D) Savings deposits are included in both M1 and M2.

Question 20

Prisoners sometimes determine a single good to be used as money.This good becomes

Accepted Answer

A) a medium of exchange and a unit of account. 
B) a medium of exchange,but not a unit of account. 
C) a unit of account,but not a medium of exchange. 
D) neither a unit of account nor a medium of exchange. 
A) a medium of exchange and a unit of account. 
B) a medium of exchange,but not a unit of account. 
C) a unit of account,but not a medium of exchange. 
D) neither a unit of account nor a medium of exchange.

Exam 16: The Monetary System: The Meaning of Money

Which of the following best illustrates the unit of account function of money?

M1 includes

When colonists in Virginia used tobacco as money,their money

Paper dollars

Fiat money

Jim transfers money from his money market account to his savings account.This action

M1 includes

Which of the following is included in M1 and M2?

Credit cards

Given the following information,what are the

Demand deposits are a type of

Given the following information,what are the

John and Jane decide to go on a vacation.As a result,they withdraw $2,500 from their savings account to purchase $2,500 worth of traveler's checks.As a result of these changes,

Economists equate money with

Which of the following defer payments?

Paper money

The money stock in the economy is​

Currently,U.S.currency is

Which of the following statements is correct?

Prisoners sometimes determine a single good to be used as money.This good becomes

Ten Principles of Economics

Ten Principles of Economics: How People Make Decisions

Ten Principles of Economics: How People Interact

Ten Principles of Economics: How the Economy As a Whole Works

Ten Principles of Economics: Part A

Ten Principles of Economics: Part B

Thinking Like an Economist

Thinking Like an Economist: The Economist As Scientist

Thinking Like an Economist: The Economist As Policy Adviser

Thinking Like an Economist: Why Economists Disagree

Thinking Like an Economist: Lets Get Going

Thinking Like an Economist: Graphing a Brief Review

Thinking Like an Economist: Part A

Thinking Like an Economist: Part B

Interdependence and the Gains From Trade

Interdependence and the Gains From Trade: A Parable for the Modern Economy

Interdependence and the Gains From Trade: Comparative Advantage the Driving Force of Specialization

Interdependence and the Gains From Trade: Applications of Comparative Advantage

Interdependence and the Gains From Trade: Conclusion

Interdependence and the Gains From Trade: Part A

Interdependence and the Gains From Trade: Part B

The Market Forces of Supply and Demand

The Market Forces of Supply and Demand:Markets and Competition

The Market Forces of Supply and Demand: Demand

The Market Forces of Supply and Demand: Supply

The Market Forces of Supply and Demand: Supply and Demand Together

The Market Forces of Supply and DemandConclusion How Prices Allocate Resources

The Market Forces of Supply and Demand: Part A

The Market Forces of Supply and Demand: Part B

Elasticity and Its Applications

Elasticity and Its Applications: The Elasticity of Demand

Elasticity and Its Applications: The Elasticity of Supply

Elasticity and Its Applications: Three Applications of Supply,demand,and Elasticity

Elasticity and Its Applications: Part A

Elasticity and Its Applications: Part B

Supply Demand and Government Policies

Supply Demand and Government Policies: Controls on Prices

Supply Demand and Government Policies: Taxes

Supply Demand and Government Policies: Part A

Supply Demand and Government Policies: Part B

Consumers Producers and the Efficiency of Markets

Consumers Producers and the Efficiency of Markets: Consumer Surplus

Consumers Producers and the Efficiency of Markets: Producer Surplus

Consumers Producers and the Efficiency of Markets: Market Efficiency

Consumers Producers and the Efficiency of Markets: Conclusion Market Efficiency and Market Failure

Consumers Producers and the Efficiency of Markets: Part A

Consumers Producers and the Efficiency of Markets: Part B

Application the Cost of Taxation

Application the Cost of Taxation: The Deadweight Loss of Taxation

Application the Cost of Taxation: The Determinants of the Deadweight Loss

Application the Cost of Taxation: Deadweight Loss and Tax Revenue As Taxes Vary

Application the Cost of Taxation: Conclusion

Application the Cost of Taxation: Part A

Application the Cost of Taxation: Part B

Application International Trade

Application International Trade: The Determinants of Trade

Application International Trade: The Winners and Losers From Trade

Application International Trade: The Arguments for Restricting Trade

Application International Trade: Conclusion

The money stock in the economy is