Question 1

An important characteristic of the modern payments system has been the rapidly increasing use of

Accepted Answer

A) checks and decreasing use of currency. 
B) electronic fund transfers. 
C) commodity monies. 
D) fiat money. 
A) checks and decreasing use of currency. 
B) electronic fund transfers. 
C) commodity monies. 
D) fiat money.

Question 2

Recent financial innovation makes the Federal Reserve's job of conducting monetary policy

Accepted Answer

A) easier,since the Fed now knows what to consider money. 
B) more difficult,since the Fed now knows what to consider money. 
C) easier,since the Fed no longer knows what to consider money. 
D) more difficult,since the Fed no longer knows what to consider money. 
A) easier,since the Fed now knows what to consider money. 
B) more difficult,since the Fed now knows what to consider money. 
C) easier,since the Fed no longer knows what to consider money. 
D) more difficult,since the Fed no longer knows what to consider money.

Question 3

The M1 measure of money includes

Accepted Answer

A) small denomination time deposits. 
B) traveler's checks. 
C) money market deposit accounts. 
D) money market mutual fund shares. 
A) small denomination time deposits. 
B) traveler's checks. 
C) money market deposit accounts. 
D) money market mutual fund shares.

Question 4

Of the following assets,the least liquid is

Accepted Answer

A) stocks. 
B) traveler's checks. 
C) checking deposits. 
D) a house. 
A) stocks. 
B) traveler's checks. 
C) checking deposits. 
D) a house.

Question 5

The conversion of a barter economy to one that uses money

Accepted Answer

A) increases efficiency by reducing the need to exchange goods and services. 
B) increases efficiency by reducing the need to specialize. 
C) increases efficiency by reducing transactions costs. 
D) does not increase economic efficiency. 
A) increases efficiency by reducing the need to exchange goods and services. 
B) increases efficiency by reducing the need to specialize. 
C) increases efficiency by reducing transactions costs. 
D) does not increase economic efficiency.

Question 6

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 7

If peanuts serve as a medium of exchange,a unit of account,and a store of value,then peanuts are

Accepted Answer

A) bank deposits. 
B) reserves. 
C) money. 
D) loanable funds. 
A) bank deposits. 
B) reserves. 
C) money. 
D) loanable funds.

Question 8

Which of the following is a TRUE statement?

Accepted Answer

A) Money and income are flow variables. 
B) Money is a flow variable. 
C) Income is a flow variable. 
D) Money and income are stock variables. 
A) Money and income are flow variables. 
B) Money is a flow variable. 
C) Income is a flow variable. 
D) Money and income are stock variables.

Question 9

As a store of value,money

Accepted Answer

A) does not earn interest. 
B) cannot be a durable asset. 
C) must be currency. 
D) is a way of saving for future purchases. 
A) does not earn interest. 
B) cannot be a durable asset. 
C) must be currency. 
D) is a way of saving for future purchases.

Question 10

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 11

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 12

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 13

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

Accepted Answer

A) NOW accounts 
B) demand deposits 
C) currency 
D) money market mutual fund shares (retail) 
A) NOW accounts 
B) demand deposits 
C) currency 
D) money market mutual fund shares (retail)

Question 14

When there are many goods is that in a barter system

Accepted Answer

A) transactions costs are minimized. 
B) there exists a multiple number of prices for each good. 
C) there is only one store of value. 
D) exchange of services is impossible. 
A) transactions costs are minimized. 
B) there exists a multiple number of prices for each good. 
C) there is only one store of value. 
D) exchange of services is impossible.

Question 15

When money prices are used to facilitate comparisons of value,money is said to function as a

Accepted Answer

A) unit of account. 
B) medium of exchange. 
C) store of value. 
D) payments-system ruler. 
A) unit of account. 
B) medium of exchange. 
C) store of value. 
D) payments-system ruler.

Question 16

________ is a flow of earnings per unit of time.

Accepted Answer

A) Income 
B) Money 
C) Wealth 
D) Currency 
A) Income 
B) Money 
C) Wealth 
D) Currency

Question 17

If merchants in the country Zed choose to close their doors,preferring to be stuck with rotting merchandise rather than worthless currency,then one can conclude that Zed is experiencing a

Accepted Answer

A) superdeflation. 
B) hyperdeflation. 
C) disinflation. 
D) hyperinflation. 
A) superdeflation. 
B) hyperdeflation. 
C) disinflation. 
D) hyperinflation.

Question 18

From 2004 to 2007,the growth rates of M1 and M2

Accepted Answer

A) were identical. 
B) both increased but at different rates. 
C) both decreased but at different rates. 
D) moved in opposite directions. 
A) were identical. 
B) both increased but at different rates. 
C) both decreased but at different rates. 
D) moved in opposite directions.

Question 19

The difference between money and income is that

Accepted Answer

A) money is a flow and income is a stock. 
B) money is a stock and income is a flow. 
C) there is no difference-money and income are both stocks. 
D) there is no difference-money and income are both flows. 
A) money is a flow and income is a stock. 
B) money is a stock and income is a flow. 
C) there is no difference-money and income are both stocks. 
D) there is no difference-money and income are both flows.

Question 20

What factors have slowed down the movement to a system where all payments are made electronically?

Accepted Answer

The equipment necessary to set up the sy

Exam 3: What Is Money

An important characteristic of the modern payments system has been the rapidly increasing use of

Recent financial innovation makes the Federal Reserve's job of conducting monetary policy

The M1 measure of money includes

Of the following assets,the least liquid is

The conversion of a barter economy to one that uses money

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

If peanuts serve as a medium of exchange,a unit of account,and a store of value,then peanuts are

Which of the following is a TRUE statement?

As a store of value,money

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

Because it is a unit of account,money

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

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

When there are many goods is that in a barter system

When money prices are used to facilitate comparisons of value,money is said to function as a

________ is a flow of earnings per unit of time.

If merchants in the country Zed choose to close their doors,preferring to be stuck with rotting merchandise rather than worthless currency,then one can conclude that Zed is experiencing a

From 2004 to 2007,the growth rates of M1 and M2

The difference between money and income is that

What factors have slowed down the movement to a system where all payments are made electronically?

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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