Question 1

Checking deposits generally have a lower return on investment than do certificates of deposit because checking deposits are less risky.

Accepted Answer

A) True 
 B)False

Question 2

Checking accounts are not money.

Accepted Answer

A) True 
 B)False

Question 3

The use of money as a medium of exchange helps reduce the inefficiencies inherent in:

Accepted Answer

A)  unstable commodity values. 
B)  an inflationary period. 
C)  a time of political uncertainty. 
D)  a barter economy. 
A)  unstable commodity values. 
B)  an inflationary period. 
C)  a time of political uncertainty. 
D)  a barter economy.

Question 4

José is putting money for college in a savings account. The bank makes the money available to business borrowers. In essence:

Accepted Answer

A)  José is supplying loanable funds for business investment. 
B)  José is a demander of loanable funds. 
C)  the interest rates that businesses pay are independent of the actions of suppliers of funds such as José. 
D)  financial markets are not performing the role of an intermediary. 
A)  José is supplying loanable funds for business investment. 
B)  José is a demander of loanable funds. 
C)  the interest rates that businesses pay are independent of the actions of suppliers of funds such as José. 
D)  financial markets are not performing the role of an intermediary.

Question 5

The majority of U.S. retirement accounts have gained back less than half of their value since the 2007-2009 stock market crash.

Accepted Answer

A) True 
 B)False

Question 6

Bond prices and interest rates are positively related.

Accepted Answer

A) True 
 B)False

Question 7

Fiat money:

Accepted Answer

A)  has a high intrinsic value. 
B)  is decreed by royalty. 
C)  is acceptable as money because the government has decreed it to be so. 
D)  is unacceptable as money. 
A)  has a high intrinsic value. 
B)  is decreed by royalty. 
C)  is acceptable as money because the government has decreed it to be so. 
D)  is unacceptable as money.

Question 8

Which of these would increase M1 in the country where Joe, Nan, and the Hardware Store are located?

Accepted Answer

A)  Joe withdraws $500 from his checking account and deposits it in his savings account. 
B)  Joe withdraws $500 from his checking account and gives it to his sister Nan who deposits it in her checking account. 
C)  Joe withdraws $500 from his savings account and deposits it in his checking account. 
D)  Joe spends $500 cash at the Hardware Store and the store deposits the $500 in its checking account. 
A)  Joe withdraws $500 from his checking account and deposits it in his savings account. 
B)  Joe withdraws $500 from his checking account and gives it to his sister Nan who deposits it in her checking account. 
C)  Joe withdraws $500 from his savings account and deposits it in his checking account. 
D)  Joe spends $500 cash at the Hardware Store and the store deposits the $500 in its checking account.

Question 9

Which statement is NOT true?

Accepted Answer

A)  Contributions to 401(k) programs are tax-deferred. 
B)  Withdrawals from 401(k) programs made after the minimum age for withdrawals are tax-exempt. 
C)  Withdrawals from 401(k) programs made before the minimum age for withdrawals are (with few exceptions) subject to a 10% early withdrawal penalty. 
D)  401(k) programs are offered by most private and public companies. 
A)  Contributions to 401(k) programs are tax-deferred. 
B)  Withdrawals from 401(k) programs made after the minimum age for withdrawals are tax-exempt. 
C)  Withdrawals from 401(k) programs made before the minimum age for withdrawals are (with few exceptions) subject to a 10% early withdrawal penalty. 
D)  401(k) programs are offered by most private and public companies.

Question 10

Because of the compounding effect, a $7,500 loan at 12% interest can grow to $23,293.86 after 10 years.

Accepted Answer

A) True 
 B)False

Question 11

Money:

Accepted Answer

A)  is anything that is accepted in exchange for other goods and services or for payment of debt. 
B)  is anything that is backed by precious metal. 
C)  is currency. 
D)  has to have an intrinsic value. 
A)  is anything that is accepted in exchange for other goods and services or for payment of debt. 
B)  is anything that is backed by precious metal. 
C)  is currency. 
D)  has to have an intrinsic value.

Question 12

Which of these is a goal of the agencies that regulate financial institutions?

Accepted Answer

A)  ensure the profitability of the institutions 
B)  increase transparency and the flow of information to investors 
C)  maintain a high rate of return for investors 
D)  minimize changes in interest rates 
A)  ensure the profitability of the institutions 
B)  increase transparency and the flow of information to investors 
C)  maintain a high rate of return for investors 
D)  minimize changes in interest rates

Question 13

Which of these would be called near money?

Accepted Answer

A)  money market deposit accounts 
B)  silver 
C)  a $100 bill 
D)  a credit card 
A)  money market deposit accounts 
B)  silver 
C)  a $100 bill 
D)  a credit card

Question 14

What are the primary functions of money?

Accepted Answer

A)  unit of account, medium of exchange, store of value 
B)  unit of liquidity, medium of exchange, store of value 
C)  unit of exchange, medium of account, store of value 
D)  unit of account, medium of exchange, store of liquidity 
A)  unit of account, medium of exchange, store of value 
B)  unit of liquidity, medium of exchange, store of value 
C)  unit of exchange, medium of account, store of value 
D)  unit of account, medium of exchange, store of liquidity

Question 15

Applying for multiple credit cards at one time:

Accepted Answer

A)  can be good, because it raises your credit score. 
B)  can be bad, because it lowers your credit score. 
C)  is good if you plan to pay off any bills you accrue. 
D)  is good for students who need to establish a credit history. 
A)  can be good, because it raises your credit score. 
B)  can be bad, because it lowers your credit score. 
C)  is good if you plan to pay off any bills you accrue. 
D)  is good for students who need to establish a credit history.

Question 16

If a person borrows $3,000 at 8% interest and never makes any payments, how much will the loan balance be after 10 years?

Accepted Answer

A)  $4,500 
B)  $5,400 
C)  $6,476.77 
D)  $7,676.67 
A)  $4,500 
B)  $5,400 
C)  $6,476.77 
D)  $7,676.67

Question 17

Entities that acquire funds from savers and then lend these funds to borrowers are called:

Accepted Answer

A)  Federal Reserve banks. 
B)  Treasury banks. 
C)  governmental agencies. 
D)  financial intermediaries. 
A)  Federal Reserve banks. 
B)  Treasury banks. 
C)  governmental agencies. 
D)  financial intermediaries.

Question 18

(Table: IRA Contributions) The table shows the marginal income tax rate for four individuals and the annual contribution they make to their respective IRAs. Which woman will receive the largest dollar amount of tax breaks for her annual IRA contribution? $$\begin{array} { | l | l | l | l | l | } 
\hline & \text { Mary } & \text { Kathleen } & \text { Isabelle } & \text { Patricia } \
\hline \begin{array} { l } 
\text { Marginal income } \
\text { tax rate }
\end{array} & 30 \% & 25 \% & 40 \% & 35 \% \
\hline \text { IRA contribution } & \$ 3,000 & \$ 3,200 & \$ 2,000 & \$ 2,500 \
\hline
\end{array}$$

Accepted Answer

A)  Mary 
B)  Kathleen 
C)  Isabelle 
D)  Patricia 
A)  Mary 
B)  Kathleen 
C)  Isabelle 
D)  Patricia

Question 19

The double coincidence of wants problem is made worse by the introduction of money.

Accepted Answer

A) True 
 B)False

Question 20

M2 includes both the medium of exchange and near monies.

Accepted Answer

A) True 
 B)False

Checking deposits generally have a lower return on investment than do certificates of deposit because checking deposits are less risky.

Checking accounts are not money.

The use of money as a medium of exchange helps reduce the inefficiencies inherent in:

José is putting money for college in a savings account. The bank makes the money available to business borrowers. In essence:

The majority of U.S. retirement accounts have gained back less than half of their value since the 2007-2009 stock market crash.

Bond prices and interest rates are positively related.

Fiat money:

Which of these would increase M1 in the country where Joe, Nan, and the Hardware Store are located?

Which statement is NOT true?

Because of the compounding effect, a $7,500 loan at 12% interest can grow to $23,293.86 after 10 years.

Money:

Which of these is a goal of the agencies that regulate financial institutions?

Which of these would be called near money?

What are the primary functions of money?

Applying for multiple credit cards at one time:

If a person borrows $3,000 at 8% interest and never makes any payments, how much will the loan balance be after 10 years?

Entities that acquire funds from savers and then lend these funds to borrowers are called:

The double coincidence of wants problem is made worse by the introduction of money.

M2 includes both the medium of exchange and near monies.

Exploring Economics

Production, Economic Growth, and Trade

Supply and Demand

Markets and Government

Introduction to Macroeconomics

Measuring Inflation and Unemployment

Economic Growth

Aggregate Expenditures

Aggregate Demand and Supply

Fiscal Policy and Debt

Money Creation and the Federal Reserve

Monetary Policy

Macroeconomic Policy: Challenges in a Global Economy

International Trade

Open Economy Macroeconomics

Filters

Exam 11: Saving, Investment, and the Financial System

Checking deposits generally have a lower return on investment than do certificates of deposit because checking deposits are less risky.

Checking accounts are not money.

The use of money as a medium of exchange helps reduce the inefficiencies inherent in:

José is putting money for college in a savings account. The bank makes the money available to business borrowers. In essence:

The majority of U.S. retirement accounts have gained back less than half of their value since the 2007-2009 stock market crash.

Bond prices and interest rates are positively related.

Fiat money:

Which of these would increase M1 in the country where Joe, Nan, and the Hardware Store are located?

Which statement is NOT true?

Because of the compounding effect, a $7,500 loan at 12% interest can grow to $23,293.86 after 10 years.

Money:

Which of these is a goal of the agencies that regulate financial institutions?

Which of these would be called near money?

What are the primary functions of money?

Applying for multiple credit cards at one time:

If a person borrows $3,000 at 8% interest and never makes any payments, how much will the loan balance be after 10 years?

Entities that acquire funds from savers and then lend these funds to borrowers are called:

The double coincidence of wants problem is made worse by the introduction of money.

M2 includes both the medium of exchange and near monies.

Exploring Economics

Production, Economic Growth, and Trade

Supply and Demand

Markets and Government

Introduction to Macroeconomics

Measuring Inflation and Unemployment

Economic Growth

Aggregate Expenditures

Aggregate Demand and Supply

Fiscal Policy and Debt

Money Creation and the Federal Reserve

Monetary Policy

Macroeconomic Policy: Challenges in a Global Economy

International Trade

Open Economy Macroeconomics

Filters