Question 1

Money

Accepted Answer

A)  does not have to be valuable except as a means of trade. 
B)  must act as a long term store of value. 
C)  must have value besides as a means to trade. 
D)  all of the above. 
A)  does not have to be valuable except as a means of trade. 
B)  must act as a long term store of value. 
C)  must have value besides as a means to trade. 
D)  all of the above.

Question 2

Money solves the "double coincidence of wants" problem since it acts 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 3

Cigarettes are an example of _____ money.

Accepted Answer

A)  commodity 
B)  fiat 
C)  representative 
D)  none of the above 
A)  commodity 
B)  fiat 
C)  representative 
D)  none of the above

Question 4

What is the double coincidence of wants?

Accepted Answer

To trade without money, one mu

Question 5

Checkable mutual funds are at least as liquid as any asset in M3.

Accepted Answer

A) True 
 B)False

Question 6

As measures of the money supply, M2 is more liquid than M3.

Accepted Answer

A) True 
 B)False

Question 7

Stocks are less liquid than any asset in M2.

Accepted Answer

A) True 
 B)False

Question 8

The best medium of exchange combines:

Accepted Answer

A)  divisibility 
B)  durability 
C)  portability 
D)  all of the above 
A)  divisibility 
B)  durability 
C)  portability 
D)  all of the above

Question 9

The biggest problem with credit money is

Accepted Answer

A)  divisibility. 
B)  elasticity of supply. 
C)  portability. 
D)  none of the above. 
A)  divisibility. 
B)  elasticity of supply. 
C)  portability. 
D)  none of the above.

Question 10

A disadvantage of credit money is that prices do not automatically adjust to changes in the money supply.

Accepted Answer

A) True 
 B)False

Question 11

In the absence of money, people

Accepted Answer

A)  must barter to trade. 
B)  produce a greater variety of goods themselves. 
C)  face the problem of "double coincidence of wants." 
D)  all of the above. 
A)  must barter to trade. 
B)  produce a greater variety of goods themselves. 
C)  face the problem of "double coincidence of wants." 
D)  all of the above.

Question 12

Under credit money, prices automatically fall in a recession.

Accepted Answer

A) True 
 B)False

Question 13

The biggest problem with credit money is

Accepted Answer

A)  its weight-to-value ratio. 
B)  elasticity of supply. 
C)  default risk. 
D)  none of the above. 
A)  its weight-to-value ratio. 
B)  elasticity of supply. 
C)  default risk. 
D)  none of the above.

Question 14

An increase in bank lending decreases the money supply.

Accepted Answer

A) True 
 B)False

Question 15

What can happen when a government creates too much money too quickly?

Accepted Answer

When a government creates too

Question 16

What effect would the introduction of fraction reserve banking have on the money supply?

Accepted Answer

A bank that issues m

Question 17

Which of the following is/are desirable attributes of a medium of exchange?

Accepted Answer

A)  the ability to carry it 
B)  there is a relatively fixed amount available 
C)  it is difficulty to break up 
D)  all of the above 
A)  the ability to carry it 
B)  there is a relatively fixed amount available 
C)  it is difficulty to break up 
D)  all of the above

Question 18

An advantage of most representative money is that it is uniform.

Accepted Answer

A) True 
 B)False

Question 19

If gold is the medium of exchange in an economy, how would prices react in a recession?

Accepted Answer

The supply of gold is inelasti

Question 20

A difficulty with gold is that it does not function well as a unit of account.

Accepted Answer

A) True 
 B)False

Exam 3: Money

Money

Money solves the "double coincidence of wants" problem since it acts as a

Cigarettes are an example of _____ money.

What is the double coincidence of wants?

Checkable mutual funds are at least as liquid as any asset in M3.

As measures of the money supply, M2 is more liquid than M3.

Stocks are less liquid than any asset in M2.

The best medium of exchange combines:

The biggest problem with credit money is

A disadvantage of credit money is that prices do not automatically adjust to changes in the money supply.

In the absence of money, people

Under credit money, prices automatically fall in a recession.

The biggest problem with credit money is

An increase in bank lending decreases the money supply.

What can happen when a government creates too much money too quickly?

What effect would the introduction of fraction reserve banking have on the money supply?

Which of the following is/are desirable attributes of a medium of exchange?

An advantage of most representative money is that it is uniform.

If gold is the medium of exchange in an economy, how would prices react in a recession?

A difficulty with gold is that it does not function well as a unit of account.

The Financial System

Interest Rates

The Economics of Interest-Rate Fluctuations

The Economics of Interest-Rate Spreads and Yield Curves

Rational Expectations, Efficient Markets, and the Valuation of Corporate Equities

Financial Structure, Transaction Costs, and Asymmetric Information

Bank Management

Innovation and Structure in Banking and Finance

The Economics of Financial Regulation

Financial Derivatives

Financial Crises: Causes and Consequences

Central Bank Form and Function

The Money Supply Process and the Money Multipliers

Monetary Policy Tools

Monetary Policy Targets and Goals

Foreign Exchange

International Monetary Regimes

Money Demand

Is-Lm

Is-Lm in Action

Aggregate Supply and Demand and the Growth Diamond

Monetary Policy Transmission Mechanisms

Inflation and Money

Rational Expectations Redux: Monetary Policy Implications

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