Question 1

In explaining the evolution of money

Accepted Answer

A)  government regulation is the most important factor. 
B)  commodity money, because it is valued more highly, tends to drive out paper money. 
C)  new forms of money evolve to lower transaction costs. 
D)  paper money is always backed by gold and therefore more desirable than checks. 
A)  government regulation is the most important factor. 
B)  commodity money, because it is valued more highly, tends to drive out paper money. 
C)  new forms of money evolve to lower transaction costs. 
D)  paper money is always backed by gold and therefore more desirable than checks.

Question 2

Currency includes

Accepted Answer

A)  paper money and coins. 
B)  paper money, coins, and checks. 
C)  paper money and checks. 
D)  paper money, coins, checks, and savings deposits. 
A)  paper money and coins. 
B)  paper money, coins, and checks. 
C)  paper money and checks. 
D)  paper money, coins, checks, and savings deposits.

Question 3

The total collection of pieces of property that serve to store value is a person's

Accepted Answer

A)  wealth. 
B)  income. 
C)  money. 
D)  credit. 
A)  wealth. 
B)  income. 
C)  money. 
D)  credit.

Question 4

The components of the U.S. M1 money supply are demand and checkable deposits plus

Accepted Answer

A)  currency. 
B)  currency plus savings deposits. 
C)  currency plus travelers checks. 
D)  currency plus travelers checks plus money market deposits. 
A)  currency. 
B)  currency plus savings deposits. 
C)  currency plus travelers checks. 
D)  currency plus travelers checks plus money market deposits.

Question 5

A person's house is part of her

Accepted Answer

A)  money. 
B)  income. 
C)  liabilities. 
D)  wealth. 
A)  money. 
B)  income. 
C)  liabilities. 
D)  wealth.

Question 6

A problem with barter exchange when there are many goods is that in a barter system

Accepted Answer

A)  transactions costs are minimized. 
B)  there exists a multiple number of prices for each good. 
C)  there is only one store of value. 
D)  exchange of services is impossible. 
A)  transactions costs are minimized. 
B)  there exists a multiple number of prices for each good. 
C)  there is only one store of value. 
D)  exchange of services is impossible.

Question 7

In a barter economy the number of prices in an economy with N goods is

Accepted Answer

A)  [N(N - 1)]/2. 
B)  N(N/2). 
C)  2N. 
D)  N(N/2) - 1. 
A)  [N(N - 1)]/2. 
B)  N(N/2). 
C)  2N. 
D)  N(N/2) - 1.

Question 8

Which of the following statements best explains how the use of money in an economy increases economic efficiency?

Accepted Answer

A)  Money increases economic efficiency because it is costless to produce. 
B)  Money increases economic efficiency because it discourages specialization. 
C)  Money increases economic efficiency because it decreases transactions costs. 
D)  Money cannot have an effect on economic efficiency. 
A)  Money increases economic efficiency because it is costless to produce. 
B)  Money increases economic efficiency because it discourages specialization. 
C)  Money increases economic efficiency because it decreases transactions costs. 
D)  Money cannot have an effect on economic efficiency.

Question 9

All but the most primitive societies use money as a medium of exchange, implying that

Accepted Answer

A)  the use of money is economically efficient. 
B)  barter exchange is economically efficient. 
C)  barter exchange cannot work outside the family. 
D)  inflation is not a concern. 
A)  the use of money is economically efficient. 
B)  barter exchange is economically efficient. 
C)  barter exchange cannot work outside the family. 
D)  inflation is not a concern.

Question 10

If an individual moves money from a demand deposit account to a money market deposit account,

Accepted Answer

A)  M1 decreases and M2 stays the same. 
B)  M1 stays the same and M2 increases. 
C)  M1 stays the same and M2 stays the same. 
D)  M1 increases and M2 decreases. 
A)  M1 decreases and M2 stays the same. 
B)  M1 stays the same and M2 increases. 
C)  M1 stays the same and M2 stays the same. 
D)  M1 increases and M2 decreases.

Question 11

The evolution of the payments system from barter to precious metals, then to fiat money, then to checks can best be understood as a consequence of

Accepted Answer

A)  government regulations designed to improve the efficiency of the payments system. 
B)  government regulations designed to promote the safety of the payments system. 
C)  innovations that reduced the costs of exchanging goods and services. 
D)  competition among firms to make it easier for customers to purchase their products. 
A)  government regulations designed to improve the efficiency of the payments system. 
B)  government regulations designed to promote the safety of the payments system. 
C)  innovations that reduced the costs of exchanging goods and services. 
D)  competition among firms to make it easier for customers to purchase their products.

Question 12

The M1 measure of money includes

Accepted Answer

A)  small denomination time deposits. 
B)  traveler's checks. 
C)  money market deposit accounts. 
D)  money market mutual fund shares. 
A)  small denomination time deposits. 
B)  traveler's checks. 
C)  money market deposit accounts. 
D)  money market mutual fund shares.

Question 13

Since it does not have to be converted into anything else to make purchases, ________ is the most liquid asset.

Accepted Answer

A)  money 
B)  stock 
C)  artwork 
D)  gold 
A)  money 
B)  stock 
C)  artwork 
D)  gold

Question 14

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

Accepted Answer

A)  Currency 
B)  Traveler's checks 
C)  Demand deposits 
D)  Small-denomination time deposits 
A)  Currency 
B)  Traveler's checks 
C)  Demand deposits 
D)  Small-denomination time deposits

In explaining the evolution of money

Currency includes

The total collection of pieces of property that serve to store value is a person's

The components of the U.S. M1 money supply are demand and checkable deposits plus

A person's house is part of her

A problem with barter exchange when there are many goods is that in a barter system

In a barter economy the number of prices in an economy with N goods is

Which of the following statements best explains how the use of money in an economy increases economic efficiency?

All but the most primitive societies use money as a medium of exchange, implying that

If an individual moves money from a demand deposit account to a money market deposit account,

The evolution of the payments system from barter to precious metals, then to fiat money, then to checks can best be understood as a consequence of

The M1 measure of money includes

Since it does not have to be converted into anything else to make purchases, ________ is the most liquid asset.

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

Why Study Money, Banking, and Financial Markets

An Overview of the Financial System

Understanding Interest Rates

The Behavior of Interest Rates

The Risk and Term Structure of Interest Rates

The Stock Market, the Theory of Rational Expectations, and the Efficient Market Hypothesis

An Economic Analysis of Financial Structure

Financial Crises

Banking and the Management of Financial Institutions

Economic Analysis of Financial Regulation

Banking Industry: Structure and Competition

Nonbank Finance

Financial Derivatives

Conflicts of Interest in the Financial Industry

Central Banks and the Federal Reserve System

The Money Supply Process

Tools of Monetary Policy

The Conduct of Monetary Policy: Strategy and Tactics

The Foreign Exchange Market

The International Financial System

Quantity Theory, Inflation, and the Demand for Money

Aggregate Demand and Supply Analysis

Monetary Policy Theory

Transmission Mechanisms of Monetary Policy

Filters

Exam 3: What Is Money

In explaining the evolution of money

Currency includes

The total collection of pieces of property that serve to store value is a person's

The components of the U.S. M1 money supply are demand and checkable deposits plus

A person's house is part of her

A problem with barter exchange when there are many goods is that in a barter system

In a barter economy the number of prices in an economy with N goods is

Which of the following statements best explains how the use of money in an economy increases economic efficiency?

All but the most primitive societies use money as a medium of exchange, implying that

If an individual moves money from a demand deposit account to a money market deposit account,

The evolution of the payments system from barter to precious metals, then to fiat money, then to checks can best be understood as a consequence of

The M1 measure of money includes

Since it does not have to be converted into anything else to make purchases, ________ is the most liquid asset.

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

Why Study Money, Banking, and Financial Markets

An Overview of the Financial System

Understanding Interest Rates

The Behavior of Interest Rates

The Risk and Term Structure of Interest Rates

The Stock Market, the Theory of Rational Expectations, and the Efficient Market Hypothesis

An Economic Analysis of Financial Structure

Financial Crises

Banking and the Management of Financial Institutions

Economic Analysis of Financial Regulation

Banking Industry: Structure and Competition

Nonbank Finance

Financial Derivatives

Conflicts of Interest in the Financial Industry

Central Banks and the Federal Reserve System

The Money Supply Process

Tools of Monetary Policy

The Conduct of Monetary Policy: Strategy and Tactics

The Foreign Exchange Market

The International Financial System

Quantity Theory, Inflation, and the Demand for Money

Aggregate Demand and Supply Analysis

Monetary Policy Theory

Transmission Mechanisms of Monetary Policy

Filters