Question 1

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 2

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 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

When economists say that money promotes ________,they mean that money encourages specialization and the division of labor.

Accepted Answer

A)  bargaining 
B)  contracting 
C)  efficiency 
D)  greed 
A)  bargaining 
B)  contracting 
C)  efficiency 
D)  greed

Question 5

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 6

Small-denomination time deposits refer to certificates of deposit with a denomination of less than

Accepted Answer

A)  $1,000. 
B)  $10,000. 
C)  $100,000. 
D)  $1,000,000. 
A)  $1,000. 
B)  $10,000. 
C)  $100,000. 
D)  $1,000,000.

Question 7

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 8

Dennis notices that jackets are on sale for $99. In this case money is functioning as a

Accepted Answer

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

Question 9

Compared to an electronic payments system,a payments system based on checks has the major drawback that

Accepted Answer

A)  checks are less costly to process. 
B)  checks take longer to process, meaning that it may take several days before the depositor can get her cash. 
C)  fraud may be more difficult to commit when paper receipts are eliminated. 
D)  legal liability is more clearly defined. 
A)  checks are less costly to process. 
B)  checks take longer to process, meaning that it may take several days before the depositor can get her cash. 
C)  fraud may be more difficult to commit when paper receipts are eliminated. 
D)  legal liability is more clearly defined.

Question 10

Although ________ currency is lighter than coins made of metals,a disadvantage arising from modern technology is the ease of ________.

Accepted Answer

A)  paper; transport 
B)  commodity; counterfeiting 
C)  fiat; transport 
D)  paper; counterfeiting 
A)  paper; transport 
B)  commodity; counterfeiting 
C)  fiat; transport 
D)  paper; counterfeiting

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

Currency includes

Accepted Answer

A)  paper money and coins. 
B)  paper money, coins, and checks. 
C)  paper money and checks. 
D)  paper money, coins, checks, and savings deposits. 
A)  paper money and coins. 
B)  paper money, coins, and checks. 
C)  paper money and checks. 
D)  paper money, coins, checks, and savings deposits.

Question 13

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 14

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 15

Which of the following is included in both M1 and M2?

Accepted Answer

A)  Currency 
B)  Savings deposits 
C)  Small-denomination time deposits 
D)  Money market deposit accounts 
A)  Currency 
B)  Savings deposits 
C)  Small-denomination time deposits 
D)  Money market deposit accounts

Question 16

The M2 monetary aggregate contains everything that is in M1 plus other assets that are highly ________ (can be turned into cash quickly at very little cost).

Accepted Answer

A)  liquid 
B)  stable 
C)  consistent 
D)  efficient 
A)  liquid 
B)  stable 
C)  consistent 
D)  efficient

Question 17

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 18

Why are most of the U.S.dollars held outside of the United States?

Accepted Answer

Concern about high inflation e

Question 19

________ is the narrowest monetary aggregate that the Fed reports.

Accepted Answer

A)  M0 
B)  M1 
C)  M2 
D)  M3 
A)  M0 
B)  M1 
C)  M2 
D)  M3

Question 20

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.

Exam 3: What Is Money

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

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

The M1 measure of money includes

When economists say that money promotes ________,they mean that money encourages specialization and the division of labor.

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

Small-denomination time deposits refer to certificates of deposit with a denomination of less than

The currency component includes paper money and coins held in

Dennis notices that jackets are on sale for $99. In this case money is functioning as a

Compared to an electronic payments system,a payments system based on checks has the major drawback that

Although ________ currency is lighter than coins made of metals,a disadvantage arising from modern technology is the ease of ________.

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

Currency includes

Of the following,the largest is

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

Which of the following is included in both M1 and M2?

The M2 monetary aggregate contains everything that is in M1 plus other assets that are highly ________ (can be turned into cash quickly at very little cost).

Monetary aggregates are

Why are most of the U.S.dollars held outside of the United States?

________ is the narrowest monetary aggregate that the Fed reports.

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

Why Study Money, banking, and Financial Markets

An Overview of the Financial System

Understanding 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

Financial Crises

Banking and the Management of Financial Institutions

Economic Analysis of Financial Regulation

Banking Industry: Structure and Competition

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

The ISLM Model

Filters

Although currency is lighter than coins made of metals,a disadvantage arising from modern technology is the ease of .