Exam 18: An Introduction to Money, Banks, and the Financial System

When Starbucks accepts your $10 bill for two Grande Lattes and one Tall Caramel Macchiato, the $10 bill serves as a

________ are documents that represent agreements between two or more parties about rights to payments of money.

A school teacher gets paid today in money, but plans to spend the money in six months on a vacation. This illustrates which function of money?

A barter economy refers to a situation in which goods and services are traded for other goods and services, with no money involved in transactions. The major shortcoming of a barter economy is

Currency held inside the banking system is included in the M1 measure of the money supply.

Money that is backed by nothing but the faith and confidence that if you accept it in exchange for something, you will be able to exchange it for something else, is referred to as ________.

U.S. paper currency is considered representative commodity money because it can be redeemed for gold by the U.S. government.

The central bank is the only authorized institution with the power to issue currency.

Janae purchased 10 Bitcoins in February with the intention of holding them until October and then selling them at a higher price. Janae was engaged in

A central bank accepts deposits from

Of all the components of the M1 and M2 measures of the money supply, the largest is savings deposits.

A $100 bill is a

In terms of accepting deposits and making loans, explain the differences between commercial banks and a central bank.

Which of the following functions of money would prove rather useless if inflation were extremely high?

Representative commodity money retained its value because

________ are financial assets that represent partial ownership of a corporation.

One of the major functions of financial markets is to help people reduce risk. Describe two financial methods people can use to reduce their exposure to risk.

When a bank takes money that you put in your checking account and gives it to someone else, at a cost, for a period of time, it is said to be

If the prices of goods and services were expressed in terms of coconuts, then coconuts would be serving as a

In our modern financial system, money is created