Question 1

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 2

Patrick places his pocket change into his savings bank on his desk each evening.By his actions,Patrick indicates that he believes that money is a

Accepted Answer

A) medium of exchange. 
B) unit of account. 
C) store of value. 
D) unit of specialization. 
A) medium of exchange. 
B) unit of account. 
C) store of value. 
D) unit of specialization.

Question 3

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 4

Explain how cigarettes could be called "money" in prisoner-of-war camps of World War II.

Accepted Answer

The cigarettes performed the three funct

Question 5

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 6

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 7

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 8

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 9

All but the most primitive societies use money as a medium of exchange,implying that

Accepted Answer

A) the use of money is economically efficient. 
B) barter exchange is economically efficient. 
C) barter exchange cannot work outside the family. 
D) inflation is not a concern. 
A) the use of money is economically efficient. 
B) barter exchange is economically efficient. 
C) barter exchange cannot work outside the family. 
D) inflation is not a concern.

Question 10

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 11

If an individual moves money from a small-denomination time deposit to a demand deposit account

Accepted Answer

A) M1 increases 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 increases 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 12

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

Question 13

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 14

Which of the following sequences accurately describes the evolution of the payments system?

Accepted Answer

A) barter,coins made of precious metals,paper currency,checks,electronic funds transfers 
B) barter,coins made of precious metals,checks,paper currency,electronic funds transfers 
C) barter,checks,paper currency,coins made of precious metals,electronic funds transfers 
D) barter,checks,paper currency,electronic funds transfers 
A) barter,coins made of precious metals,paper currency,checks,electronic funds transfers 
B) barter,coins made of precious metals,checks,paper currency,electronic funds transfers 
C) barter,checks,paper currency,coins made of precious metals,electronic funds transfers 
D) barter,checks,paper currency,electronic funds transfers

Question 15

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 16

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 17

Defining money becomes ________ difficult as the pace of financial innovation ________.

Accepted Answer

A) less;quickens 
B) more;quickens 
C) more;slows 
D) more;stops 
A) less;quickens 
B) more;quickens 
C) more;slows 
D) more;stops

Question 18

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 19

Compared to checks,paper currency and coins have the major drawbacks that they

Accepted Answer

A) are easily stolen. 
B) are hard to counterfeit. 
C) are not the most liquid assets. 
D) must be backed by gold. 
A) are easily stolen. 
B) are hard to counterfeit. 
C) are not the most liquid assets. 
D) must be backed by gold.

Question 20

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

Accepted Answer

A) M1 increases 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 increases 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.

Exam 3: What Is Money

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

Patrick places his pocket change into his savings bank on his desk each evening.By his actions,Patrick indicates that he believes that money is a

In explaining the evolution of money

Explain how cigarettes could be called "money" in prisoner-of-war camps of World War II.

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 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

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

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

All but the most primitive societies use money as a medium of exchange,implying that

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

If an individual moves money from a small-denomination time deposit to a demand deposit account

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

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

Which of the following sequences accurately describes the evolution of the payments system?

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

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

Defining money becomes ________ difficult as the pace of financial innovation ________.

As a store of value,money

Compared to checks,paper currency and coins have the major drawbacks that they

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

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

Nonbank Finance

Financial Derivatives

Conflicts of Interest in the Financial Industry

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

Aggregate Demand and Supply Analysis

Monetary Policy Theory

Transmission Mechanisms of Monetary Policy

Financial Crises in Emerging Market Economies

The IS Curve

The Monetary Policy and Aggregate Demand Curves

The Role of Expectations in Monetary Policy

The ISLM Model

Filters

Defining money becomes difficult as the pace of financial innovation .