Question 1

Which function of money represents a measure for stating the prices of goods and services?

Accepted Answer

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

Question 2

The quantity theory of money asserts that inflation is the result of growth in

Accepted Answer

A)  the quantity of money. 
B)  potential GDP. 
C)  the natural rate of unemployment. 
D)  money wage rates. 
A)  the quantity of money. 
B)  potential GDP. 
C)  the natural rate of unemployment. 
D)  money wage rates.

Question 3

TBK Bank Balance Sheet
Assets Liabilities
  
-The above table presents the balance sheet of the TBK commercial bank. If the desired reserve ratio is 25 percent, what is this bank's desired reserves?

Accepted Answer

A)  $120 
B)  $150 
C)  $175 
D)  $30 
A)  $120 
B)  $150 
C)  $175 
D)  $30

Question 4

U.S. currency

Accepted Answer

A)  is less efficient than barter. 
B)  includes tobacco. 
C)  is the sum of M1 and M2. 
D)  is composed of the bills and coins held by individuals and businesses. 
A)  is less efficient than barter. 
B)  includes tobacco. 
C)  is the sum of M1 and M2. 
D)  is composed of the bills and coins held by individuals and businesses.

Question 5

The initial impact of the Fed's open market sale of government securities to banks is

Accepted Answer

A)  an increase in the quantity of money by some multiple of the dollar volume of the sale. 
B)  an increase in bank deposits at the Fed. 
C)  a decrease in the quantity of money by some multiple of the dollar volume of the sale. 
D)  a decrease of the banking system's reserve deposits at the Fed. 
A)  an increase in the quantity of money by some multiple of the dollar volume of the sale. 
B)  an increase in bank deposits at the Fed. 
C)  a decrease in the quantity of money by some multiple of the dollar volume of the sale. 
D)  a decrease of the banking system's reserve deposits at the Fed.

Question 6

Which of the following does NOT describe a function of money?

Accepted Answer

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

Question 7

The Federal Reserve is divided into 7 districts.

Accepted Answer

A) True 
 B)False

Question 8

Describe how financial innovation has affected the demand for money.

Accepted Answer

Financial innovation is the development

Question 9

The demand for nominal money

Accepted Answer

A)  increases as the price level increases. 
B)  decreases as the price level increases. 
C)  depends on the quantity of money. 
D)  is the same as the demand for real money. 
A)  increases as the price level increases. 
B)  decreases as the price level increases. 
C)  depends on the quantity of money. 
D)  is the same as the demand for real money.

Question 10

What is the opportunity cost of holding money?

Accepted Answer

The opportunity cost

Question 11

There is a movement along the demand for money curve if

Accepted Answer

A)  the nominal interest rate rises. 
B)  there is an economic expansion so that real GDP increases. 
C)  banking customers use ATM machines more. 
D)  the price level increases. 
A)  the nominal interest rate rises. 
B)  there is an economic expansion so that real GDP increases. 
C)  banking customers use ATM machines more. 
D)  the price level increases.

Question 12

When the Federal Reserve lends reserves to depository institutions, it charges them interest. That interest rate is called the

Accepted Answer

A)  federal funds rate. 
B)  loan rate. 
C)  prime rate. 
D)  discount rate. 
A)  federal funds rate. 
B)  loan rate. 
C)  prime rate. 
D)  discount rate.

Question 13

Checking deposits are

Accepted Answer

A)  not part of money. 
B)  part of money. 
C)  small in volume relative to currency in circulation. 
D)  quite different from checking accounts. 
A)  not part of money. 
B)  part of money. 
C)  small in volume relative to currency in circulation. 
D)  quite different from checking accounts.

Question 14

Barter is an inefficient means of exchange because

Accepted Answer

A)  barter transactions require a double coincidence of wants. 
B)  barter only occurs in relatively primitive economies. 
C)  demand will not necessarily equal supply. 
D)  in a barter transaction only one party needs to want what the other party has to sell. 
A)  barter transactions require a double coincidence of wants. 
B)  barter only occurs in relatively primitive economies. 
C)  demand will not necessarily equal supply. 
D)  in a barter transaction only one party needs to want what the other party has to sell.

Question 15

The term "currency drain" refers to an increase in currency held outside banks.

Accepted Answer

A) True 
 B)False

Question 16

"Because monetary policy must be approved by the president of the United States, the president is chair of the Federal Open Market Committee." Analyze the previous statement-is it correct or incorrect?

Accepted Answer

The statement is incorrect on several di

Question 17

Which of the following applies to money when it serves as a store of value?
I. Money is a store of value because it is an agreed measure for stating prices for goods.
II. The more stable money's value is, the better it serves as a store of value.
III. When money serves as a store of value, it requires a double coincidence of wants.

Accepted Answer

A)  I only 
B)  II only 
C)  I and II 
D)  II and III 
A)  I only 
B)  II only 
C)  I and II 
D)  II and III

Question 18

-In the above figure, suppose the economy is initially on the demand for money curve MD1. What is the effect of a fall in the nominal interest rate?

Accepted Answer

A)  The demand for money curve would shift rightward to MD2. 
B)  The demand for money curve would shift leftward to MD0. 
C)  There would be a movement upward along the demand for money curve MD1. 
D)  There would be a movement downward along the demand for money curve MD1. 
A)  The demand for money curve would shift rightward to MD2. 
B)  The demand for money curve would shift leftward to MD0. 
C)  There would be a movement upward along the demand for money curve MD1. 
D)  There would be a movement downward along the demand for money curve MD1.

Question 19

As a unit of account, money is used to

Accepted Answer

A)  state prices of all goods and services. 
B)  pay off future debts. 
C)  hold purchasing power over time. 
D)  exchange for goods and services. 
A)  state prices of all goods and services. 
B)  pay off future debts. 
C)  hold purchasing power over time. 
D)  exchange for goods and services.

Question 20

The ________ rate is the interest rate at which the Fed lends ________ to depository institutions.

Accepted Answer

A)  discount rate; reserves 
B)  discount rate; gold 
C)  federal funds rate; deposits 
D)  federal funds rate; reserves 
A)  discount rate; reserves 
B)  discount rate; gold 
C)  federal funds rate; deposits 
D)  federal funds rate; reserves

Which function of money represents a measure for stating the prices of goods and services?

The quantity theory of money asserts that inflation is the result of growth in

TBK Bank Balance Sheet Assets Liabilities -The above table presents the balance sheet of the TBK commercial bank. If the desired reserve ratio is 25 percent, what is this bank's desired reserves?

U.S. currency

The initial impact of the Fed's open market sale of government securities to banks is

Which of the following does NOT describe a function of money?

The Federal Reserve is divided into 7 districts.

Describe how financial innovation has affected the demand for money.

The demand for nominal money

What is the opportunity cost of holding money?

There is a movement along the demand for money curve if

When the Federal Reserve lends reserves to depository institutions, it charges them interest. That interest rate is called the

Checking deposits are

Barter is an inefficient means of exchange because

The term "currency drain" refers to an increase in currency held outside banks.

"Because monetary policy must be approved by the president of the United States, the president is chair of the Federal Open Market Committee." Analyze the previous statement-is it correct or incorrect?

-In the above figure, suppose the economy is initially on the demand for money curve MD₁. What is the effect of a fall in the nominal interest rate?

As a unit of account, money is used to

The rate is the interest rate at which the Fed lends to depository institutions.

What Is Economics

The Economic Problem

Demand and Supply

Measuring Gdp and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

Expenditure Multipliers

The Business Cycle, Inflation, and Deflation

Fiscal Policy

Monetary Policy

International Trade Policy

Filters

Exam 8: Money, the Price Level, and Inflation

Which function of money represents a measure for stating the prices of goods and services?

The quantity theory of money asserts that inflation is the result of growth in

TBK Bank Balance Sheet Assets Liabilities -The above table presents the balance sheet of the TBK commercial bank. If the desired reserve ratio is 25 percent, what is this bank's desired reserves?

U.S. currency

The initial impact of the Fed's open market sale of government securities to banks is

Which of the following does NOT describe a function of money?

The Federal Reserve is divided into 7 districts.

Describe how financial innovation has affected the demand for money.

The demand for nominal money

What is the opportunity cost of holding money?

There is a movement along the demand for money curve if

When the Federal Reserve lends reserves to depository institutions, it charges them interest. That interest rate is called the

Checking deposits are

Barter is an inefficient means of exchange because

The term "currency drain" refers to an increase in currency held outside banks.

"Because monetary policy must be approved by the president of the United States, the president is chair of the Federal Open Market Committee." Analyze the previous statement-is it correct or incorrect?

-In the above figure, suppose the economy is initially on the demand for money curve MD1. What is the effect of a fall in the nominal interest rate?

As a unit of account, money is used to

The ________ rate is the interest rate at which the Fed lends ________ to depository institutions.

What Is Economics

The Economic Problem

Demand and Supply

Measuring Gdp and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

Expenditure Multipliers

The Business Cycle, Inflation, and Deflation

Fiscal Policy

Monetary Policy

International Trade Policy

Filters

-In the above figure, suppose the economy is initially on the demand for money curve MD₁. What is the effect of a fall in the nominal interest rate?

The rate is the interest rate at which the Fed lends to depository institutions.