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

What will happen to the sizes of the M1 money supply and the M2 money supply if the following transactions take place? a. Tasha withdraws $3,000 from her checking account and holds it as currency. b. Arturo withdraws $3,000 from his savings account and deposits it in his checking account. c. Benjamin withdraws 3,000 from his savings account and puts it in a certificate of deposit (CD). d. Marisol withdraws $3,000 from her home safe and deposits it in her savings account.

(Short Answer)

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Question 21

All central banks are controlled by government.

(True/False)

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Question 22

If Veronica withdraws $1,500 from her checking account and deposits it in her savings account, then M1 will and M2 will .

(Multiple Choice)

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Question 23

The statement, "My Hello Kitty Limited Edition Vespa scooter is worth $5,500"represents money's function as a

(Multiple Choice)

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Question 24

The price a borrower must pay for the use of other people's money is called

(Multiple Choice)

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Question 25

Financial securities that represent promises to repay a specified amount of money at a particular point in the future are

(Multiple Choice)

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Question 26

Scenario 18.1: Curly, Moe, Larry, and Shemp are the four inhabitants of a small island. Moe has 200 gold coins, the only money on the island. He takes the coins to Curly, a goldsmith, for storage and Curly issues Moe a receipt for the 200 coins he has deposited with Curly. Larry comes to Curly to borrow 100 gold coins, signing a legally binding promise to repay the coins, and Curly issues Larry a receipt saying that Larry now has 100 gold coins on deposit. Upon finding out that Larry borrowed gold coins from Curly, Shemp comes to Curly to borrow 200 gold coins. Since Curly has 200 actual gold coins on deposit, he gets Shemp to sign a legally binding promise to repay the 200 coins and then issues Shemp a receipt saying that Shemp now has 200 gold coins on deposit. -Refer to Scenario 18.1. When Curly made the loans to Moe, Larry, and Shemp, there were 500 coins' worth of receipts. These receipts are best described as

(Multiple Choice)

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Question 27

The largest proportion of M1 is made up of

(Multiple Choice)

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Question 28

By making exchange , money allows for specialization and higher .

(Multiple Choice)

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Question 29

One reason people store wealth is to help smooth consumption over time.

(True/False)

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Question 30

Most of the world's currencies are backed by some type of commodity.

(True/False)

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Question 31

Scenario 18.1: Curly, Moe, Larry, and Shemp are the four inhabitants of a small island. Moe has 200 gold coins, the only money on the island. He takes the coins to Curly, a goldsmith, for storage and Curly issues Moe a receipt for the 200 coins he has deposited with Curly. Larry comes to Curly to borrow 100 gold coins, signing a legally binding promise to repay the coins, and Curly issues Larry a receipt saying that Larry now has 100 gold coins on deposit. Upon finding out that Larry borrowed gold coins from Curly, Shemp comes to Curly to borrow 200 gold coins. Since Curly has 200 actual gold coins on deposit, he gets Shemp to sign a legally binding promise to repay the 200 coins and then issues Shemp a receipt saying that Shemp now has 200 gold coins on deposit. -Refer to Scenario 18.1. When Curly made the loans to Moe, Larry, and Shemp, there were 500 coins' worth of receipts, so in total, the receipts were ________ backed by gold.

(Multiple Choice)

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Question 32

If Veronica withdraws $1,500 from her savings account and deposits it in her checking account, then M1 will and M2 will .

(Multiple Choice)

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Question 33

Table 18.1 : Consider the information above for a small economy. Assume there are no traveler's checks. -Refer to Table 18.1. M1 in this simple economy equals

(Multiple Choice)

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Question 34

Which part or parts of the following statement describe each of the three functions of money?"A pair of prescription glasses costs $250. I am spending $250 on one pair right now, and am saving $250 to buy a second pair in 6 months when the new styles are introduced."

(Short Answer)

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Question 35

The M2 measure of the money supply equals

(Multiple Choice)

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Question 36

Commodity money has intrinsic value.

(True/False)

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Question 37

A stock is an IOU and a bond represents ownership in a company.

(True/False)

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Question 38

Mortgage-backed securities are large blocks of mortgages which have been repackaged into ________ and sold to pension funds and other large investors.

(Multiple Choice)

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Question 39

Table 18.1 : Consider the information above for a small economy. Assume there are no traveler's checks. -Refer to Table 18.1. M2 in this simple economy equals

(Multiple Choice)

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Question 40

Showing 21 - 40 of 57

All central banks are controlled by government.

If Veronica withdraws $1,500 from her checking account and deposits it in her savings account, then M1 will and M2 will .

The statement, "My Hello Kitty Limited Edition Vespa scooter is worth $5,500"represents money's function as a

The price a borrower must pay for the use of other people's money is called

Financial securities that represent promises to repay a specified amount of money at a particular point in the future are

The largest proportion of M1 is made up of

By making exchange , money allows for specialization and higher .

One reason people store wealth is to help smooth consumption over time.

Most of the world's currencies are backed by some type of commodity.

If Veronica withdraws $1,500 from her savings account and deposits it in her checking account, then M1 will and M2 will .

Table 18.1 : Consider the information above for a small economy. Assume there are no traveler's checks. -Refer to Table 18.1. M1 in this simple economy equals

Which part or parts of the following statement describe each of the three functions of money?"A pair of prescription glasses costs $250. I am spending $250 on one pair right now, and am saving $250 to buy a second pair in 6 months when the new styles are introduced."

The M2 measure of the money supply equals

Commodity money has intrinsic value.

A stock is an IOU and a bond represents ownership in a company.

Mortgage-backed securities are large blocks of mortgages which have been repackaged into ________ and sold to pension funds and other large investors.

Table 18.1 : Consider the information above for a small economy. Assume there are no traveler's checks. -Refer to Table 18.1. M2 in this simple economy equals

Fundamental Concepts in Economics

Cost-Benefit Analysis and the Value of a Life

Basic Game Theory: Games Between Two Players

Game Theory: Games Between Three or More Players

Free Exchange: Individual and International Trade

The Market System: Functions, Structure, and Institutions

The Nature of Pollution Problems

Government Policies to Regulate Pollution

Resource Depletion and Sustainability

Public Goods and the Role of Government

Public Goods: Tackling Large Projects and Eminent Domain

The Volunteers Dilemma: a Collective Inaction Problem

Voting: You Cant Always Get What You Want

The Economics of Health Insurance and Health Care

Segregation and Discrimination

Gross Domestic Product and the Wealth of Nations: an Introduction to the Macroeconomy

Unemployment

The Federal Reserve: Monetary Policy, Economic Activity, and Inflation

The Federal Government: Taxes, Spending, and Fiscal Policy

Income Inequality and the Redistribution of Income

Filters

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

All central banks are controlled by government.

If Veronica withdraws $1,500 from her checking account and deposits it in her savings account, then M1 will ________ and M2 will ________.

The statement, "My Hello Kitty Limited Edition Vespa scooter is worth $5,500"represents money's function as a

The price a borrower must pay for the use of other people's money is called

Financial securities that represent promises to repay a specified amount of money at a particular point in the future are

The largest proportion of M1 is made up of

By making exchange ________, money allows for specialization and higher ________.

One reason people store wealth is to help smooth consumption over time.

Most of the world's currencies are backed by some type of commodity.

If Veronica withdraws $1,500 from her savings account and deposits it in her checking account, then M1 will ________ and M2 will ________.

Table 18.1 : Consider the information above for a small economy. Assume there are no traveler's checks. -Refer to Table 18.1. M1 in this simple economy equals

Which part or parts of the following statement describe each of the three functions of money?"A pair of prescription glasses costs $250. I am spending $250 on one pair right now, and am saving $250 to buy a second pair in 6 months when the new styles are introduced."

The M2 measure of the money supply equals

Commodity money has intrinsic value.

A stock is an IOU and a bond represents ownership in a company.

Mortgage-backed securities are large blocks of mortgages which have been repackaged into ________ and sold to pension funds and other large investors.

Table 18.1 : Consider the information above for a small economy. Assume there are no traveler's checks. -Refer to Table 18.1. M2 in this simple economy equals

Fundamental Concepts in Economics

Cost-Benefit Analysis and the Value of a Life

Basic Game Theory: Games Between Two Players

Game Theory: Games Between Three or More Players

Free Exchange: Individual and International Trade

The Market System: Functions, Structure, and Institutions

The Nature of Pollution Problems

Government Policies to Regulate Pollution

Resource Depletion and Sustainability

Public Goods and the Role of Government

Public Goods: Tackling Large Projects and Eminent Domain

The Volunteers Dilemma: a Collective Inaction Problem

Voting: You Cant Always Get What You Want

The Economics of Health Insurance and Health Care

Segregation and Discrimination

Gross Domestic Product and the Wealth of Nations: an Introduction to the Macroeconomy

Unemployment

The Federal Reserve: Monetary Policy, Economic Activity, and Inflation

The Federal Government: Taxes, Spending, and Fiscal Policy

Income Inequality and the Redistribution of Income

Filters

If Veronica withdraws $1,500 from her checking account and deposits it in her savings account, then M1 will and M2 will .

By making exchange , money allows for specialization and higher .

If Veronica withdraws $1,500 from her savings account and deposits it in her checking account, then M1 will and M2 will .