Question 1

In a barter economy the number of prices in an economy with N goods is

Accepted Answer

A) [N(N - 1)]/2. 
B) N(N/2). 
C) 2N. 
D) N(N/2)- 1. 
A) [N(N - 1)]/2. 
B) N(N/2). 
C) 2N. 
D) N(N/2)- 1.

Question 2

Even economists have no single,precise definition of money because

Accepted Answer

A) money supply statistics are a state secret. 
B) the Federal Reserve does not employ or report different measures of the money supply. 
C) the "moneyness" or liquidity of an asset is a matter of degree. 
D) economists find disagreement interesting and refuse to agree for ideological reasons. 
A) money supply statistics are a state secret. 
B) the Federal Reserve does not employ or report different measures of the money supply. 
C) the "moneyness" or liquidity of an asset is a matter of degree. 
D) economists find disagreement interesting and refuse to agree for ideological reasons.

Question 3

The evolution of the payments system from barter to precious metals,then to fiat money,then to checks can best be understood as a consequence of the fact that

Accepted Answer

A) paper is more costly to produce than precious metals. 
B) precious metals were not generally acceptable. 
C) precious metals were difficult to carry and transport. 
D) paper money is less accepted than checks. 
A) paper is more costly to produce than precious metals. 
B) precious metals were not generally acceptable. 
C) precious metals were difficult to carry and transport. 
D) paper money is less accepted than checks.

Question 4

When we say that money is a stock variable,we mean that

Accepted Answer

A) the quantity of money is measured at a given point in time. 
B) we must attach a time period to the measure. 
C) it is sold in the equity market. 
D) money never loses purchasing power. 
A) the quantity of money is measured at a given point in time. 
B) we must attach a time period to the measure. 
C) it is sold in the equity market. 
D) money never loses purchasing power.

Question 5

________ are the time and resources spent trying to exchange goods and services.

Accepted Answer

A) Bargaining costs 
B) Transaction costs 
C) Contracting costs 
D) Barter costs 
A) Bargaining costs 
B) Transaction costs 
C) Contracting costs 
D) Barter costs

Question 6

When compared to exchange systems that rely on money,disadvantages of the barter system include

Accepted Answer

A) the requirement of a double coincidence of wants. 
B) lowering the cost of exchanging goods over time. 
C) lowering the cost of exchange to those who would specialize. 
D) encouraging specialization and the division of labor. 
A) the requirement of a double coincidence of wants. 
B) lowering the cost of exchanging goods over time. 
C) lowering the cost of exchange to those who would specialize. 
D) encouraging specialization and the division of labor.

Question 7

Since it does not have to be converted into anything else to make purchases,________ is the most liquid asset.

Accepted Answer

A) money 
B) stock 
C) artwork 
D) gold 
A) money 
B) stock 
C) artwork 
D) gold

Question 8

Ranking assets from most liquid to least liquid,the correct order is

Accepted Answer

A) savings bonds;house;currency. 
B) currency;savings bonds;house. 
C) currency;house;savings bonds. 
D) house;savings bonds;currency. 
A) savings bonds;house;currency. 
B) currency;savings bonds;house. 
C) currency;house;savings bonds. 
D) house;savings bonds;currency.

Question 9

In explaining the evolution of money

Accepted Answer

A) government regulation is the most important factor. 
B) commodity money,because it is valued more highly,tends to drive out paper money. 
C) new forms of money evolve to lower transaction costs. 
D) paper money is always backed by gold and therefore more desirable than checks. 
A) government regulation is the most important factor. 
B) commodity money,because it is valued more highly,tends to drive out paper money. 
C) new forms of money evolve to lower transaction costs. 
D) paper money is always backed by gold and therefore more desirable than checks.

Question 10

A disadvantage of ________made from precious metals is that it is very heavy and hard to transport from one place to another.

Accepted Answer

A) commodity money 
B) fiat money 
C) electronic money 
D) paper money 
A) commodity money 
B) fiat money 
C) electronic money 
D) paper money

Question 11

Money ________ transaction costs,allowing people to specialize in what they do best.

Accepted Answer

A) reduces 
B) increases 
C) enhances 
D) eliminates 
A) reduces 
B) increases 
C) enhances 
D) eliminates

Question 12

The payments system is

Accepted Answer

A) the method of conducting transactions in the economy. 
B) used by union officials to set salary caps. 
C) an illegal method of rewarding contracts. 
D) used by your employer to determine salary increases. 
A) the method of conducting transactions in the economy. 
B) used by union officials to set salary caps. 
C) an illegal method of rewarding contracts. 
D) used by your employer to determine salary increases.

Question 13

As the payments system evolves from barter to a monetary system,

Accepted Answer

A) commodity money is likely to precede the use of paper currency. 
B) transaction costs increase. 
C) the number of prices that need to be calculated increase rather dramatically. 
D) specialization decreases. 
A) commodity money is likely to precede the use of paper currency. 
B) transaction costs increase. 
C) the number of prices that need to be calculated increase rather dramatically. 
D) specialization decreases.

Question 14

If there are four goods in a barter economy,then one needs to know ________ prices in order to exchange one good for another.

Accepted Answer

A) 8 
B) 6 
C) 5 
D) 4 
A) 8 
B) 6 
C) 5 
D) 4

Question 15

If an individual uses money from a demand deposit account to purchase a U.S. savings bond

Accepted Answer

A) M1 decreases and M2 stays the same. 
B) M1 stays the same and M2 increases. 
C) M1 stays the same and M2 stays the same. 
D) M1 decreases and M2 decreases. 
A) M1 decreases and M2 stays the same. 
B) M1 stays the same and M2 increases. 
C) M1 stays the same and M2 stays the same. 
D) M1 decreases and M2 decreases.

Question 16

If an individual moves money from a savings deposit account to a money market deposit account

Accepted Answer

A) M1 decreases and M2 stays the same. 
B) M1 stays the same and M2 increases. 
C) M1 stays the same and M2 stays the same. 
D) M1 increases and M2 decreases. 
A) M1 decreases and M2 stays the same. 
B) M1 stays the same and M2 increases. 
C) M1 stays the same and M2 stays the same. 
D) M1 increases and M2 decreases.

Question 17

For a commodity to function effectively as money it must be

Accepted Answer

A) easily standardized,making it easy to ascertain its value. 
B) difficult to make change. 
C) deteriorate quickly so that its supply does not become too large. 
D) hard to carry around. 
A) easily standardized,making it easy to ascertain its value. 
B) difficult to make change. 
C) deteriorate quickly so that its supply does not become too large. 
D) hard to carry around.

Question 18

The other checkable deposits component of the M1 measure reported by the Federal Reserve includes

Accepted Answer

A) negotiable time deposits. 
B) money market mutual fund shares. 
C) automatic transfer from savings accounts. 
D) money market deposit accounts. 
A) negotiable time deposits. 
B) money market mutual fund shares. 
C) automatic transfer from savings accounts. 
D) money market deposit accounts.

Question 19

Because it is a unit of account,money

Accepted Answer

A) increases transaction costs. 
B) reduces the number of prices that need to be calculated. 
C) does not earn interest. 
D) discourages specialization. 
A) increases transaction costs. 
B) reduces the number of prices that need to be calculated. 
C) does not earn interest. 
D) discourages specialization.

Question 20

Which of the following is NOT a form of e-money?

Accepted Answer

A) a debit card 
B) a credit card 
C) a stored-value card 
D) a smart card 
A) a debit card 
B) a credit card 
C) a stored-value card 
D) a smart card

Exam 3: What Is Money

In a barter economy the number of prices in an economy with N goods is

Even economists have no single,precise definition of money because

The evolution of the payments system from barter to precious metals,then to fiat money,then to checks can best be understood as a consequence of the fact that

When we say that money is a stock variable,we mean that

________ are the time and resources spent trying to exchange goods and services.

When compared to exchange systems that rely on money,disadvantages of the barter system include

Since it does not have to be converted into anything else to make purchases,________ is the most liquid asset.

Ranking assets from most liquid to least liquid,the correct order is

In explaining the evolution of money

A disadvantage of ________made from precious metals is that it is very heavy and hard to transport from one place to another.

Money ________ transaction costs,allowing people to specialize in what they do best.

The payments system is

As the payments system evolves from barter to a monetary system,

If there are four goods in a barter economy,then one needs to know ________ prices in order to exchange one good for another.

If an individual uses money from a demand deposit account to purchase a U.S. savings bond

If an individual moves money from a savings deposit account to a money market deposit account

For a commodity to function effectively as money it must be

The other checkable deposits component of the M1 measure reported by the Federal Reserve includes

Because it is a unit of account,money

Which of the following is NOT a form of e-money?

Why Study Money, banking, and Financial Markets

An Overview of the Financial System

The Meaning of Interest Rates

The Behavior of Interest Rates

The Risk and Term Structure of Interest Rates

The Stock Market, the Theory of Rational Expectations, and the Efficient Market Hypothesis

An Economic Analysis of Financial Structure

Banking and the Management of Financial Institutions

Economic Analysis of Financial Regulation

Banking Industry: Structure and Competition

Financial Crises

Central Banks and the Federal Reserve System

The Money Supply Process

Tools of Monetary Policy

The Conduct of Monetary Policy: Strategy and Tactics

The Foreign Exchange Market

The International Financial System

Quantity Theory, inflation and the Demand for Money

The Is Curve

The Monetary Policy and Aggregate Demand Curves

Aggregate Demand and Supply Analysis

Monetary Policy Theory

The Role of Expectations in Monetary Policy

Transmission Mechanisms of Monetary Policy

Financial Crises in Emerging Market Economies

The ISLM Model

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