Question 1

Fiat money is less elastic than credit money.

Accepted Answer

A) True 
 B)False  False

Question 2

What are the advantages and disadvantages of commodity money?

Accepted Answer

The major advantage is that it is self-equilibrating. Some of the disadvantages are that it has an inelastic supply, it is more difficult to store, more difficult to transport, it is indivisible, and authentication costs are relatively high.

Question 3

Fiat money has no intrinsic value.

Accepted Answer

A) True 
 B)False  True

Question 4

Representative, fiat, and credit monies are more efficient than commodity money.

Accepted Answer

A) True 
 B)False

Question 5

If a fiat money becomes easier to produce, prices denominated in that money will (ceteris paribus)

Accepted Answer

A)  rise. 
B)  fall. 
C)  stay the same. 
D)  cannot be determined. 
A)  rise. 
B)  fall. 
C)  stay the same. 
D)  cannot be determined.

Question 6

How has the introduction of SWEEP accounts affected the money supply?

Accepted Answer

SWEEP accounts essentially all

Question 7

An advantage of commodity money is that prices automatically adjust with the supply of money. If this is true, why would economists also say the supply of money should be inelastic?

Accepted Answer

The process of price

Question 8

An advantage of commodity money is that deflation is impossible.

Accepted Answer

A) True 
 B)False

Question 9

Default risk is a potential problem for which of the following form(s) of money?

Accepted Answer

A)  commodity 
B)  representative 
C)  credit 
D)  all of the above 
A)  commodity 
B)  representative 
C)  credit 
D)  all of the above

Question 10

Only fiat money helps solve the "double coincidence of want" problem.

Accepted Answer

A) True 
 B)False

Question 11

During a hyperinflation, money is not functioning well as a

Accepted Answer

A)  medium of exchange. 
B)  unit of account. 
C)  store of value. 
D)  all of the above. 
A)  medium of exchange. 
B)  unit of account. 
C)  store of value. 
D)  all of the above.

Question 12

Why would silver dollar coins be a better store of value than gold bars?

Accepted Answer

The coins would have

Question 13

An advantage of commodity money is that prices cannot rise indefinitely.

Accepted Answer

A) True 
 B)False

Question 14

Diamonds do not make very good money because they are not easily

Accepted Answer

A)  divisible. 
B)  durable. 
C)  portable. 
D)  all of the above. 
A)  divisible. 
B)  durable. 
C)  portable. 
D)  all of the above.

Question 15

At the end of the 19th century, some people (including William Jennings Bryan) advocated a bimetallic monetary standard using both gold and silver, to alleviate the deflations that occurred periodically. Was this a sensible suggestion? Would a bimetallic alleviate the problems with gold?

Accepted Answer

Switching to a bimetallic standard could

Question 16

How can adoption of a foreign currency help during the collapse of a local currency?

Accepted Answer

Adoption of a foreign currency

Question 17

Is a bank with the following balance sheet engaged in fractional reserve banking?

Accepted Answer

@#IMG-DLM& No. The sum of the

Question 18

One of the defining features of money is that it does not pay interest.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following types of money are not self-equilibrating?

Accepted Answer

A)  commodity 
B)  representative 
C)  fiat 
D)  all are self-equilibrating 
A)  commodity 
B)  representative 
C)  fiat 
D)  all are self-equilibrating

Question 20

An advantage of credit money is

Accepted Answer

A)  elasticity of supply. 
B)  default risk. 
C)  indivisibility. 
D)  none of the above. 
A)  elasticity of supply. 
B)  default risk. 
C)  indivisibility. 
D)  none of the above.

Exam 3: Money

Fiat money is less elastic than credit money.

What are the advantages and disadvantages of commodity money?

Fiat money has no intrinsic value.

Representative, fiat, and credit monies are more efficient than commodity money.

If a fiat money becomes easier to produce, prices denominated in that money will (ceteris paribus)

How has the introduction of SWEEP accounts affected the money supply?

An advantage of commodity money is that prices automatically adjust with the supply of money. If this is true, why would economists also say the supply of money should be inelastic?

An advantage of commodity money is that deflation is impossible.

Default risk is a potential problem for which of the following form(s) of money?

Only fiat money helps solve the "double coincidence of want" problem.

During a hyperinflation, money is not functioning well as a

Why would silver dollar coins be a better store of value than gold bars?

An advantage of commodity money is that prices cannot rise indefinitely.

Diamonds do not make very good money because they are not easily

At the end of the 19th century, some people (including William Jennings Bryan) advocated a bimetallic monetary standard using both gold and silver, to alleviate the deflations that occurred periodically. Was this a sensible suggestion? Would a bimetallic alleviate the problems with gold?

How can adoption of a foreign currency help during the collapse of a local currency?

Is a bank with the following balance sheet engaged in fractional reserve banking?

One of the defining features of money is that it does not pay interest.

Which of the following types of money are not self-equilibrating?

An advantage of credit money is

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At the end of the 19^th century, some people (including William Jennings Bryan) advocated a bimetallic monetary standard using both gold and silver, to alleviate the deflations that occurred periodically. Was this a sensible suggestion? Would a bimetallic alleviate the problems with gold?