Question 1

What are the functions of money?

Accepted Answer

Medium of exchange,

Question 2

Hideo and Hannah decide to go on a vacation. As a result, they withdraw $5,000 from their savings account to purchase $5,000 worth of traveler's checks. As a result of these changes,

Accepted Answer

A) M1 increases by $5,000 and M2 decreases by $5,000. 
B) M1 increases by $5,000 and M2 stays the same. 
C) M1 and M2 stay the same. 
D) M1 decreases by $5,000 and M2 increases by $5,000. 
A) M1 increases by $5,000 and M2 decreases by $5,000. 
B) M1 increases by $5,000 and M2 stays the same. 
C) M1 and M2 stay the same. 
D) M1 decreases by $5,000 and M2 increases by $5,000.

Question 3

Money allows people to specialize in what they do best, thereby raising everyone's standard of living.

Accepted Answer

A) True 
 B)False

Question 4

Other things the same, if reserve requirements are decreased, the reserve ratio

Accepted Answer

A) increases, the money multiplier increases, and the money supply increases. 
B) decreases, the money multiplier increases, and the money supply increases. 
C) increases, the money multiplier decreases, and the money supply decreases. 
D) decreases, the money multiplier decreases, and the money supply increases. 
A) increases, the money multiplier increases, and the money supply increases. 
B) decreases, the money multiplier increases, and the money supply increases. 
C) increases, the money multiplier decreases, and the money supply decreases. 
D) decreases, the money multiplier decreases, and the money supply increases.

Question 5

Which of the following is not included in either M1 or M2?

Accepted Answer

A) U.S.Treasury bills 
B) Small time deposits 
C) Demand deposits 
D) Money market mutual funds 
A) U.S.Treasury bills 
B) Small time deposits 
C) Demand deposits 
D) Money market mutual funds

Question 6

The money multiplier is _____ when the reserve ratio is 12.5 percent.

Accepted Answer

The answer of The money multiplier is _____ when the...

Question 7

What does the "double coincidence of wants" refer to?

Accepted Answer

"Double coincidence of wants" refers to

Question 8

You pay for cheese and bread from the deli with currency. Which function of money does this best illustrate?

Accepted Answer

A) Medium of exchange 
B) Unit of account 
C) Store of value 
D) Liquidity 
A) Medium of exchange 
B) Unit of account 
C) Store of value 
D) Liquidity

Question 9

If the federal funds rate were below the level the Federal Reserve had targeted, the Fed could move the rate back towards its target by

Accepted Answer

A) buying bonds.This buying would reduce the money supply. 
B) buying bonds.This buying would increase the money supply. 
C) selling bonds.This selling would reduce the money supply. 
D) selling bonds.This selling would increase the money supply. 
A) buying bonds.This buying would reduce the money supply. 
B) buying bonds.This buying would increase the money supply. 
C) selling bonds.This selling would reduce the money supply. 
D) selling bonds.This selling would increase the money supply.

Question 10

Which of the following best represents fiat money?

Accepted Answer

A) The euro 
B) A gold bar 
C) Monopoly money 
D) Baseball cards 
A) The euro 
B) A gold bar 
C) Monopoly money 
D) Baseball cards

Exam 29: The Monetary System

What are the functions of money?

Hideo and Hannah decide to go on a vacation. As a result, they withdraw $5,000 from their savings account to purchase $5,000 worth of traveler's checks. As a result of these changes,

Money allows people to specialize in what they do best, thereby raising everyone's standard of living.

Other things the same, if reserve requirements are decreased, the reserve ratio

Which of the following is not included in either M1 or M2?

The money multiplier is _____ when the reserve ratio is 12.5 percent.

What does the "double coincidence of wants" refer to?

You pay for cheese and bread from the deli with currency. Which function of money does this best illustrate?

If the federal funds rate were below the level the Federal Reserve had targeted, the Fed could move the rate back towards its target by

Which of the following best represents fiat money?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Applications: The Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers in Microeconomics

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

Tools of Finance

Unemployment and Its Natural Rate

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

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