Question 1

Which of the following does NOT describe the velocity of money?

Accepted Answer

A)  (P x Y)/M. 
B)  Nominal GDP/Money Supply. 
C)  A measure of the speed at which money changes hands in transactions involving final goods and services. 
D)  The rate of circulation of money. 
E)  Bank reserves divided by deposits. 
A)  (P x Y)/M. 
B)  Nominal GDP/Money Supply. 
C)  A measure of the speed at which money changes hands in transactions involving final goods and services. 
D)  The rate of circulation of money. 
E)  Bank reserves divided by deposits.

Question 2

In Macroland,there is $1,000,000 in currency that can either be held by the public or used by banks as reserves.The banks' desired reserve-deposit ratio is 10%.If the public of Macroland decides to hold less currency,decreasing the proportion they hold from 50% to 25%,the money supply in Macroland will

Accepted Answer

A)  increase. 
B)  decrease. 
C)  remain the same. 
D)  may either increase or decrease. 
E)  will increase initially,but then return to the original level. 
A)  increase. 
B)  decrease. 
C)  remain the same. 
D)  may either increase or decrease. 
E)  will increase initially,but then return to the original level.

Question 3

Finding two parties to a trade,each of whom has something for which the other wishes to trade,is called a

Accepted Answer

A)  unit of account. 
B)  store of value. 
C)  medium of exchange. 
D)  double coincidence of wants. 
E)  diversification of interests. 
A)  unit of account. 
B)  store of value. 
C)  medium of exchange. 
D)  double coincidence of wants. 
E)  diversification of interests.

Question 4

An understanding of the money supply is critical to understanding ________,such as occurred in Germany from 1922 to 23.

Accepted Answer

A)  economic depression 
B)  falling interest rates 
C)  hyperinflation 
D)  a falling price level 
E)  disinflation 
A)  economic depression 
B)  falling interest rates 
C)  hyperinflation 
D)  a falling price level 
E)  disinflation

Question 5

In Macroland,there is $1,000,000 in currency that can either be held by the public or used by banks as reserves.The banks' desired reserve-deposit ratio is 10%.If the public of Macroland decides to hold more currency,increasing the proportion they hold from 50% to 75%,the money supply in Macroland will

Accepted Answer

A)  increase. 
B)  decrease. 
C)  remain the same. 
D)  may either increase or decrease. 
E)  will increase initially,but then return to the original level. 
A)  increase. 
B)  decrease. 
C)  remain the same. 
D)  may either increase or decrease. 
E)  will increase initially,but then return to the original level.

Question 6

Money eliminates the need for a double coincidence of wants primarily through its use as a

Accepted Answer

A)  unit of account. 
B)  medium of exchange. 
C)  store of value. 
D)  standard of confidence. 
E)  legal tender. 
A)  unit of account. 
B)  medium of exchange. 
C)  store of value. 
D)  standard of confidence. 
E)  legal tender.

Question 7

Fiat money refers to

Accepted Answer

A)  a one-dollar coin. 
B)  coins. 
C)  currency. 
D)  bank deposits. 
E)  an asset of no intrinsic value that is generally accepted as a means of payment. 
A)  a one-dollar coin. 
B)  coins. 
C)  currency. 
D)  bank deposits. 
E)  an asset of no intrinsic value that is generally accepted as a means of payment.

Question 8

During hyperinflation,because changes in ________ are so great relative to changes in ________,it is reasonable to assume that ________ are constant.

Accepted Answer

A)  the money supply;real GDP and the velocity of money;real GDP and the velocity of money 
B)  the money supply;inflation and the velocity of money;inflation and the velocity of money 
C)  real GDP;the money supply and the velocity of money;the money supply and the velocity of money 
D)  real GDP;inflation and the velocity of money;inflation and the velocity of money 
E)  inflation;real GDP and the money supply;real GDP and the money supply 
A)  the money supply;real GDP and the velocity of money;real GDP and the velocity of money 
B)  the money supply;inflation and the velocity of money;inflation and the velocity of money 
C)  real GDP;the money supply and the velocity of money;the money supply and the velocity of money 
D)  real GDP;inflation and the velocity of money;inflation and the velocity of money 
E)  inflation;real GDP and the money supply;real GDP and the money supply

Question 9

When bank reserves exactly equal bank deposits,the bank is said to engage in

Accepted Answer

A)  fractional reserve banking. 
B)  diversification. 
C)  100%-reserve banking. 
D)  credit allocation. 
E)  open-market operations. 
A)  fractional reserve banking. 
B)  diversification. 
C)  100%-reserve banking. 
D)  credit allocation. 
E)  open-market operations.

Question 10

When money is the basic measure of economic value,it serves as a

Accepted Answer

A)  financial intermediary. 
B)  double coincidence of wants. 
C)  store of value. 
D)  medium of exchange. 
E)  unit of account. 
A)  financial intermediary. 
B)  double coincidence of wants. 
C)  store of value. 
D)  medium of exchange. 
E)  unit of account.

Question 11

Money serves as a store of value when

Accepted Answer

A)  it is used to purchase goods and services. 
B)  there is direct trade of goods and services. 
C)  it is a basic measure of economic value. 
D)  it is a means of holding wealth. 
E)  there is a double coincidence of wants. 
A)  it is used to purchase goods and services. 
B)  there is direct trade of goods and services. 
C)  it is a basic measure of economic value. 
D)  it is a means of holding wealth. 
E)  there is a double coincidence of wants.

Question 12

In Econland,all $15,000,000 in currency is held by banks as reserves.The public does not hold any currency.If the banks' desired reserve-deposit ratio is 5%,the money supply in Econland equals

Accepted Answer

A)  $14,285,714. 
B)  $15,000,000. 
C)  $15,750,000. 
D)  $300,000,000. 
E)  $315,000,000. 
A)  $14,285,714. 
B)  $15,000,000. 
C)  $15,750,000. 
D)  $300,000,000. 
E)  $315,000,000.

Question 13

Money serves as a measure of economic value (i.e. ,a unit of account),allowing

Accepted Answer

A)  people to hold their wealth in a liquid form. 
B)  governments to restrict the issuance of private monies. 
C)  easy comparison of the relative prices of goods and services. 
D)  goods and services to be exchanged with a double coincidence of wants. 
E)  private money to be issued for local usE. 
A)  people to hold their wealth in a liquid form. 
B)  governments to restrict the issuance of private monies. 
C)  easy comparison of the relative prices of goods and services. 
D)  goods and services to be exchanged with a double coincidence of wants. 
E)  private money to be issued for local usE.

Question 14

In response to the persistence of recessionary gaps,some central banks have engaged in unconventional monetary policies such as

Accepted Answer

A)  increasing deposit insurance. 
B)  reducing the velocity of money. 
C)  increasing open-market operations. 
D)  increasing seigniorage. 
E)  quantitative easing. 
A)  increasing deposit insurance. 
B)  reducing the velocity of money. 
C)  increasing open-market operations. 
D)  increasing seigniorage. 
E)  quantitative easing.

Question 15

Any asset used to make purchases is

Accepted Answer

A)  a bond. 
B)  a stock. 
C)  a deposit. 
D)  money. 
E)  incomE. 
A)  a bond. 
B)  a stock. 
C)  a deposit. 
D)  money. 
E)  incomE.

Question 16

Barter is

Accepted Answer

A)  the direct trade of goods and services for other goods and services. 
B)  an asset used in purchasing goods and services. 
C)  the extension of credit to borrowers using funds raised from savers. 
D)  an equity claim to ownership. 
E)  a means of channelling funds from savers to borrowers with productive investment opportunities. 
A)  the direct trade of goods and services for other goods and services. 
B)  an asset used in purchasing goods and services. 
C)  the extension of credit to borrowers using funds raised from savers. 
D)  an equity claim to ownership. 
E)  a means of channelling funds from savers to borrowers with productive investment opportunities.

Question 17

The quantity equation states that

Accepted Answer

A)  Y = PAE. 
B)  AD = AS. 
C)  M x V = P x Y. 
D)  PAE = C + I + G + NX. 
E)  QD = QS. 
A)  Y = PAE. 
B)  AD = AS. 
C)  M x V = P x Y. 
D)  PAE = C + I + G + NX. 
E)  QD = QS.

Question 18

The quantity equation states that money times its velocity equals

Accepted Answer

A)  the inflation rate times real output. 
B)  the price level times real output. 
C)  net exports times the exchange rate. 
D)  the interest rate times investment. 
E)  the interest rate times the inflation ratE. 
A)  the inflation rate times real output. 
B)  the price level times real output. 
C)  net exports times the exchange rate. 
D)  the interest rate times investment. 
E)  the interest rate times the inflation ratE.

Question 19

Suppose r is the desired reserve-deposit ratio (R/D)and the money supply (M)consists of currency (C)and bank deposits (D).Then,the money supply (M)will equal

Accepted Answer

A)  C + R/r. 
B)  D + R/r. 
C)  R + C/r. 
D)  C - R/r. 
E)  C x R/r. 
A)  C + R/r. 
B)  D + R/r. 
C)  R + C/r. 
D)  C - R/r. 
E)  C x R/r.

Question 20

In Macroland,there is $2,000,000 in currency.The public holds half of the currency and banks hold the rest as reserves.If the banks' desired reserve-deposit ratio is 5%,deposits in Macroland equal ________ and the money supply equals _______.

Accepted Answer

A)  $2,000,000;$2,100,000 
B)  $20,000,000;$21,000,000 
C)  $20,000,000: $22,000,000 
D)  $40,000,000;$40,000,000 
E)  $40,000,000;$42,000,000 
A)  $2,000,000;$2,100,000 
B)  $20,000,000;$21,000,000 
C)  $20,000,000: $22,000,000 
D)  $40,000,000;$40,000,000 
E)  $40,000,000;$42,000,000

Which of the following does NOT describe the velocity of money?

Finding two parties to a trade,each of whom has something for which the other wishes to trade,is called a

An understanding of the money supply is critical to understanding ________,such as occurred in Germany from 1922 to 23.

Money eliminates the need for a double coincidence of wants primarily through its use as a

Fiat money refers to

During hyperinflation,because changes in are so great relative to changes in ,it is reasonable to assume that are constant.

When bank reserves exactly equal bank deposits,the bank is said to engage in

When money is the basic measure of economic value,it serves as a

Money serves as a store of value when

In Econland,all $15,000,000 in currency is held by banks as reserves.The public does not hold any currency.If the banks' desired reserve-deposit ratio is 5%,the money supply in Econland equals

Money serves as a measure of economic value (i.e. ,a unit of account),allowing

In response to the persistence of recessionary gaps,some central banks have engaged in unconventional monetary policies such as

Any asset used to make purchases is

Barter is

The quantity equation states that

The quantity equation states that money times its velocity equals

Suppose r is the desired reserve-deposit ratio (R/D)and the money supply (M)consists of currency (C)and bank deposits (D).Then,the money supply (M)will equal

In Macroland,there is $2,000,000 in currency.The public holds half of the currency and banks hold the rest as reserves.If the banks' desired reserve-deposit ratio is 5%,deposits in Macroland equal __ and the money supply equals _.

Measuring Macroeconomic Performance: Output and Prices

Measuring Macroeconomic Performance: Saving and Wealth

Measuring Macroeconomic Performance: Wages, Employment and the Labour Market

Short-Term Economic Fluctuations

Spending and Output in the Short Run

Fiscal Policy

Money, Prices and the Reserve Bank

The Reserve Bank and the Economy

Macroeconomic Policy

The Economy in the Long Run: an Introduction to Economic Growth

The Production Function Approach to Understanding Growth

Savings, Capital Formation and Comparative Economic Growth

International Trade

Exchange Rates and the Open Economy

The Balance of Payments: Net Exports and International Capital Flows

Filters

Exam 9: The Aggregate Demand - Aggregate Supply Model

Which of the following does NOT describe the velocity of money?

Finding two parties to a trade,each of whom has something for which the other wishes to trade,is called a

An understanding of the money supply is critical to understanding ________,such as occurred in Germany from 1922 to 23.

Money eliminates the need for a double coincidence of wants primarily through its use as a

Fiat money refers to

During hyperinflation,because changes in ________ are so great relative to changes in ________,it is reasonable to assume that ________ are constant.

When bank reserves exactly equal bank deposits,the bank is said to engage in

When money is the basic measure of economic value,it serves as a

Money serves as a store of value when

In Econland,all $15,000,000 in currency is held by banks as reserves.The public does not hold any currency.If the banks' desired reserve-deposit ratio is 5%,the money supply in Econland equals

Money serves as a measure of economic value (i.e. ,a unit of account),allowing

In response to the persistence of recessionary gaps,some central banks have engaged in unconventional monetary policies such as

Any asset used to make purchases is

Barter is

The quantity equation states that

The quantity equation states that money times its velocity equals

Suppose r is the desired reserve-deposit ratio (R/D)and the money supply (M)consists of currency (C)and bank deposits (D).Then,the money supply (M)will equal

In Macroland,there is $2,000,000 in currency.The public holds half of the currency and banks hold the rest as reserves.If the banks' desired reserve-deposit ratio is 5%,deposits in Macroland equal ________ and the money supply equals _______.

Measuring Macroeconomic Performance: Output and Prices

Measuring Macroeconomic Performance: Saving and Wealth

Measuring Macroeconomic Performance: Wages, Employment and the Labour Market

Short-Term Economic Fluctuations

Spending and Output in the Short Run

Fiscal Policy

Money, Prices and the Reserve Bank

The Reserve Bank and the Economy

Macroeconomic Policy

The Economy in the Long Run: an Introduction to Economic Growth

The Production Function Approach to Understanding Growth

Savings, Capital Formation and Comparative Economic Growth

International Trade

Exchange Rates and the Open Economy

The Balance of Payments: Net Exports and International Capital Flows

Filters

During hyperinflation,because changes in are so great relative to changes in ,it is reasonable to assume that are constant.

In Macroland,there is $2,000,000 in currency.The public holds half of the currency and banks hold the rest as reserves.If the banks' desired reserve-deposit ratio is 5%,deposits in Macroland equal __ and the money supply equals _.