Question 1

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 2

If an individual redeems a U.S.savings bond for currency

Accepted Answer

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

Question 3

The total collection of pieces of property that serve to store value is a person's

Accepted Answer

A) wealth. 
B) income. 
C) money. 
D) credit. 
A) wealth. 
B) income. 
C) money. 
D) credit.

Question 4

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 5

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 6

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 7

When paper currency is decreed by governments as legal tender,legally it must be

Accepted Answer

A) paper currency backed by gold. 
B) a precious metal such as gold or silver. 
C) accepted as payment for debts. 
D) convertible into an electronic payment. 
A) paper currency backed by gold. 
B) a precious metal such as gold or silver. 
C) accepted as payment for debts. 
D) convertible into an electronic payment.

Question 8

Which of the following is NOT included in the M1 measure of money but is included in the M2 measure of money?

Accepted Answer

A) currency 
B) traveler's checks 
C) demand deposits 
D) small-denomination time deposits 
A) currency 
B) traveler's checks 
C) demand deposits 
D) small-denomination time deposits

Question 9

People hold money even during inflationary episodes when other assets prove to be better stores of value.This can be explained by the fact that money is

Accepted Answer

A) extremely liquid. 
B) a unique good for which there are no substitutes. 
C) the only thing accepted in economic exchange. 
D) backed by gold. 
A) extremely liquid. 
B) a unique good for which there are no substitutes. 
C) the only thing accepted in economic exchange. 
D) backed by gold.

Question 10

Of the following,the largest is

Accepted Answer

A) money market deposit accounts. 
B) demand deposits. 
C) M1. 
D) M2. 
A) money market deposit accounts. 
B) demand deposits. 
C) M1. 
D) M2.

Question 11

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 12

Monetary aggregates are

Accepted Answer

A) measures of the money supply reported by the Federal Reserve. 
B) measures of the wealth of individuals. 
C) never redefined since "money" never changes. 
D) reported by the Treasury Department annually. 
A) measures of the money supply reported by the Federal Reserve. 
B) measures of the wealth of individuals. 
C) never redefined since "money" never changes. 
D) reported by the Treasury Department annually.

Question 13

Which of the following is NOT included in the measure of M1?

Accepted Answer

A) NOW accounts 
B) demand deposits 
C) currency 
D) savings deposits 
A) NOW accounts 
B) demand deposits 
C) currency 
D) savings deposits

Question 14

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 15

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

Accepted Answer

A) government regulations designed to improve the efficiency of the payments system. 
B) government regulations designed to promote the safety of the payments system. 
C) innovations that reduced the costs of exchanging goods and services. 
D) competition among firms to make it easier for customers to purchase their products. 
A) government regulations designed to improve the efficiency of the payments system. 
B) government regulations designed to promote the safety of the payments system. 
C) innovations that reduced the costs of exchanging goods and services. 
D) competition among firms to make it easier for customers to purchase their products.

Question 16

Which of the following statements accurately describes the two measures of the money supply?

Accepted Answer

A) The two measures do not move together,so they cannot be used interchangeably by policymakers. 
B) The two measures' movements closely parallel each other,even on a month-to-month basis. 
C) Short-run movements in the money supply are extremely reliable. 
D) M2 is the narrowest measure the Fed reports. 
A) The two measures do not move together,so they cannot be used interchangeably by policymakers. 
B) The two measures' movements closely parallel each other,even on a month-to-month basis. 
C) Short-run movements in the money supply are extremely reliable. 
D) M2 is the narrowest measure the Fed reports.

Question 17

A hyperinflation is

Accepted Answer

A) a period of extreme inflation generally greater than 50% per month. 
B) a period of anxiety caused by rising prices. 
C) an increase in output caused by higher prices. 
D) impossible today because of tighter regulations. 
A) a period of extreme inflation generally greater than 50% per month. 
B) a period of anxiety caused by rising prices. 
C) an increase in output caused by higher prices. 
D) impossible today because of tighter regulations.

Question 18

The currency component includes paper money and coins held in

Accepted Answer

A) bank vaults. 
B) ATMs. 
C) the hands of the nonbank public. 
D) the central bank. 
A) bank vaults. 
B) ATMs. 
C) the hands of the nonbank public. 
D) the central bank.

Question 19

To an economist,________ is anything that is generally accepted in payment for goods and services or in the repayment of debt.

Accepted Answer

A) wealth 
B) income 
C) money 
D) credit 
A) wealth 
B) income 
C) money 
D) credit

Question 20

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.

Exam 3: What Is Money

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

If an individual redeems a U.S.savings bond for currency

The total collection of pieces of property that serve to store value is a person's

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

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

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

When paper currency is decreed by governments as legal tender,legally it must be

Which of the following is NOT included in the M1 measure of money but is included in the M2 measure of money?

People hold money even during inflationary episodes when other assets prove to be better stores of value.This can be explained by the fact that money is

Of the following,the largest is

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

Monetary aggregates are

Which of the following is NOT included in the measure of M1?

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

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

Which of the following statements accurately describes the two measures of the money supply?

A hyperinflation is

The currency component includes paper money and coins held in

To an economist,________ is anything that is generally accepted in payment for goods and services or in the repayment of debt.

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

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

Web 1:financial Crises in Emerging Market Economies

Web 2:the Islm Model

Web 3:nonbank Finance

Web 4:financial Derivatives

Web 5:conflicts of Interest in the Financial Services Industry

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