Question 1

If a $1,000 bond is issued with a coupon rate of 11% and the market interest rate drops to 7%, the trading price of that bond will drop.

Accepted Answer

A) True 
 B)False  False

Question 2

_____ are near money.

Accepted Answer

A)  Money market deposit accounts 
B)  American Express cards 
C)  Demand deposits 
D)  Bonds 
A)  Money market deposit accounts 
B)  American Express cards 
C)  Demand deposits 
D)  Bonds A

Question 3

A decrease in incomes tends to shift the supply of loanable funds curve leftward.

Accepted Answer

A) True 
 B)False  True

Question 4

Which statement is TRUE?

Accepted Answer

A)  Coins constitute 90% of currency. 
B)  Paper money constitutes 90% of M1. 
C)  Paper money constitutes 90% of currency. 
D)  Coins constitute 90% of M1. 
A)  Coins constitute 90% of currency. 
B)  Paper money constitutes 90% of M1. 
C)  Paper money constitutes 90% of currency. 
D)  Coins constitute 90% of M1.

Question 5

(Figure: Market for Loanable Funds 2) Based on the graph, if technological advances increase productivity, the demand for loanable funds curve will shift from _____ to _____ and the new equilibrium will be at point _____, holding supply constant at S0.

Accepted Answer

A)  D0; D1; c 
B)  D0; D1; b 
C)  D1; D0; a 
D)  D1; D0; d 
A)  D0; D1; c 
B)  D0; D1; b 
C)  D1; D0; a 
D)  D1; D0; d

Question 6

Which statement about M2 is incorrect?

Accepted Answer

A)  M2 is a broader measure of money than M1. 
B)  Small-denomination time deposits are part of M2. 
C)  Near monies are more liquid than M1. 
D)  Demand deposits are part of M2. 
A)  M2 is a broader measure of money than M1. 
B)  Small-denomination time deposits are part of M2. 
C)  Near monies are more liquid than M1. 
D)  Demand deposits are part of M2.

Question 7

All of these are classified as "near monies" rather than money for the reasons specified EXCEPT

Accepted Answer

A)  savings deposits, because savings cannot be spent. It must be transferred into cash or checking to be spent. 
B)  money market deposit accounts, because, while checks can be written, there are restrictions, such as limits on the number of withdrawals per month, that keep them from serving daily needs as a medium of exchange. 
C)  small-denomination time deposits, because they cannot be used as a medium of exchange and carry penalties for early liquidation. 
D)  credit cards, because they do not provide a store of value. 
A)  savings deposits, because savings cannot be spent. It must be transferred into cash or checking to be spent. 
B)  money market deposit accounts, because, while checks can be written, there are restrictions, such as limits on the number of withdrawals per month, that keep them from serving daily needs as a medium of exchange. 
C)  small-denomination time deposits, because they cannot be used as a medium of exchange and carry penalties for early liquidation. 
D)  credit cards, because they do not provide a store of value.

Question 8

(Table: Retirement Plans for Four Companies) Jan is deciding between job offers from the four companies represented in the table. She expects to work for five more years before retiring and wants to have as much as possible in her retirement savings account in five years. She will contribute only enough of her salary as is needed to obtain the maximum employer match. Given the information in the table, which company should she choose in order to reach her goal?

Accepted Answer

A)  company A 
B)  company B 
C)  company C 
D)  company D 
A)  company A 
B)  company B 
C)  company C 
D)  company D

Question 9

Near monies include

Accepted Answer

A)  savings deposits. 
B)  currency. 
C)  demand deposits. 
D)  bonds. 
A)  savings deposits. 
B)  currency. 
C)  demand deposits. 
D)  bonds.

Question 10

(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 has the smallest decrease in after-tax income after making her IRA contribution?

Accepted Answer

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

Question 11

Which asset is NOT included in M2?

Accepted Answer

A)  currency 
B)  demand deposits 
C)  savings deposits 
D)  large-denomination time deposits 
A)  currency 
B)  demand deposits 
C)  savings deposits 
D)  large-denomination time deposits

Question 12

Joan begins the month with $100 in her checking account. When she receives a paycheck for $1,200 on the 5th of the month, she uses that paycheck to put $1,000 in her checking account, takes $80 in cash, and deposits $120 in her savings account. During the month, she spends $550 on rent and utilities, $30 on household items, $10 on a T-shirt, and $350 on food, leaving a balance of $240 in her checking account. Based on the given information, which statement is true?

Accepted Answer

A)  The $100 and the $220 in Joan's savings account are part of M1. 
B)  When Joan deposits her paycheck and deposits $120 in her savings account, M1 falls by $120. 
C)  Joan's deposit into her checking account increases M1 by $1,000. 
D)  M1 falls as Joan spends her money. 
A)  The $100 and the $220 in Joan's savings account are part of M1. 
B)  When Joan deposits her paycheck and deposits $120 in her savings account, M1 falls by $120. 
C)  Joan's deposit into her checking account increases M1 by $1,000. 
D)  M1 falls as Joan spends her money.

Question 13

Which of these is included in M1?

Accepted Answer

A)  savings deposits 
B)  large-denomination certificates of deposit 
C)  demand deposits 
D)  deposits in money market accounts 
A)  savings deposits 
B)  large-denomination certificates of deposit 
C)  demand deposits 
D)  deposits in money market accounts

Question 14

Which of these is NOT one of the criteria for a commodity to serve as money?

Accepted Answer

A)  The commodity must be durable. 
B)  The commodity must be accepted by many people as money. 
C)  The commodity must be issued as currency or coin. 
D)  The commodity must be standardized. 
A)  The commodity must be durable. 
B)  The commodity must be accepted by many people as money. 
C)  The commodity must be issued as currency or coin. 
D)  The commodity must be standardized.

Question 15

If a perpetuity bond has an interest payment of $80 and your required yield is 10%, the most you would be willing to pay for the bond is

Accepted Answer

A)  $80. 
B)  $800. 
C)  $1,000. 
D)  $8,000. 
A)  $80. 
B)  $800. 
C)  $1,000. 
D)  $8,000.

Question 16

What is money, and what are its functions? Support your response with examples.

Accepted Answer

Money is anything that is accepted in ex

Question 17

When money is used to measure and compare the value of goods and services, it is used as a

Accepted Answer

A)  unit of account. 
B)  store of value. 
C)  medium of exchange. 
D)  means of payment. 
A)  unit of account. 
B)  store of value. 
C)  medium of exchange. 
D)  means of payment.

Question 18

When economists speak of "the money supply," they are usually referring to M2.

Accepted Answer

A) True 
 B)False

Question 19

The functions of money include a

Accepted Answer

A)  medium of exchange and a means to pay taxes. 
B)  defense against inflation and a unit of account. 
C)  store of value and a defense against depreciation. 
D)  medium of exchange, a unit of account, and a store of value. 
A)  medium of exchange and a means to pay taxes. 
B)  defense against inflation and a unit of account. 
C)  store of value and a defense against depreciation. 
D)  medium of exchange, a unit of account, and a store of value.

Question 20

Which of these is likely to lead to higher interest rates?

Accepted Answer

A)  a less positive economic outlook 
B)  the end of a government program that provides taxpayers with additional incentives to invest in their retirement plans 
C)  a decrease in asset prices 
D)  a decrease in firms' expectations about the economy 
A)  a less positive economic outlook 
B)  the end of a government program that provides taxpayers with additional incentives to invest in their retirement plans 
C)  a decrease in asset prices 
D)  a decrease in firms' expectations about the economy

If a $1,000 bond is issued with a coupon rate of 11% and the market interest rate drops to 7%, the trading price of that bond will drop.

_____ are near money.

A decrease in incomes tends to shift the supply of loanable funds curve leftward.

Which statement is TRUE?

(Figure: Market for Loanable Funds 2) Based on the graph, if technological advances increase productivity, the demand for loanable funds curve will shift from ___ to _ and the new equilibrium will be at point ___, holding supply constant at S₀.

Which statement about M2 is incorrect?

All of these are classified as "near monies" rather than money for the reasons specified EXCEPT

Near monies include

(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 has the smallest decrease in after-tax income after making her IRA contribution?

Which asset is NOT included in M2?

Which of these is included in M1?

Which of these is NOT one of the criteria for a commodity to serve as money?

If a perpetuity bond has an interest payment of $80 and your required yield is 10%, the most you would be willing to pay for the bond is

What is money, and what are its functions? Support your response with examples.

When money is used to measure and compare the value of goods and services, it is used as a

When economists speak of "the money supply," they are usually referring to M2.

The functions of money include a

Which of these is likely to lead to higher interest rates?

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

If a $1,000 bond is issued with a coupon rate of 11% and the market interest rate drops to 7%, the trading price of that bond will drop.

_____ are near money.

A decrease in incomes tends to shift the supply of loanable funds curve leftward.

Which statement is TRUE?

(Figure: Market for Loanable Funds 2) Based on the graph, if technological advances increase productivity, the demand for loanable funds curve will shift from _____ to _____ and the new equilibrium will be at point _____, holding supply constant at S0.

Which statement about M2 is incorrect?

All of these are classified as "near monies" rather than money for the reasons specified EXCEPT

Near monies include

(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 has the smallest decrease in after-tax income after making her IRA contribution?

Which asset is NOT included in M2?

Which of these is included in M1?

Which of these is NOT one of the criteria for a commodity to serve as money?

If a perpetuity bond has an interest payment of $80 and your required yield is 10%, the most you would be willing to pay for the bond is

What is money, and what are its functions? Support your response with examples.

When money is used to measure and compare the value of goods and services, it is used as a

When economists speak of "the money supply," they are usually referring to M2.

The functions of money include a

Which of these is likely to lead to higher interest rates?

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

(Figure: Market for Loanable Funds 2) Based on the graph, if technological advances increase productivity, the demand for loanable funds curve will shift from ___ to _ and the new equilibrium will be at point ___, holding supply constant at S₀.