Question 1

Which type of money has intrinsic value?

Accepted Answer

A) commodity money 
B) fiat money 
C) both commodity money and fiat money 
D) neither commodity money nor fiat money 
A) commodity money 
B) fiat money 
C) both commodity money and fiat money 
D) neither commodity money nor fiat money

Question 2

Which of the following is not included in either M1 or M2?

Accepted Answer

A) money market deposit accounts 
B) large time deposit 
C) demand deposits 
D) money market mutual funds 
A) money market deposit accounts 
B) large time deposit 
C) demand deposits 
D) money market mutual funds

Question 3

Which of the following is both a store of value and regularly used as a medium of exchange?

Accepted Answer

A) cash and stocks 
B) cash but not stocks 
C) stocks but not cash 
D) neither cash nor stocks 
A) cash and stocks 
B) cash but not stocks 
C) stocks but not cash 
D) neither cash nor stocks

Question 4

Savings deposits are included in

Accepted Answer

A) M1 but not M2. 
B) M2 but not M1. 
C) M1 and M2. 
D) neither M1 nor M2. 
A) M1 but not M2. 
B) M2 but not M1. 
C) M1 and M2. 
D) neither M1 nor M2.

Question 5

Any item that people can use to transfer purchasing power from the present to the future is called

Accepted Answer

A) a medium of exchange. 
B) a unit of account. 
C) a store of value. 
D) None of the above is correct. 
A) a medium of exchange. 
B) a unit of account. 
C) a store of value. 
D) None of the above is correct.

Question 6

Which of the following lists is included in what economists call "money"?

Accepted Answer

A) cash 
B) cash and stocks and bonds 
C) cash and stocks and bonds and real estate 
D) cash and stocks and bonds and real estate and all other assets 
A) cash 
B) cash and stocks and bonds 
C) cash and stocks and bonds and real estate 
D) cash and stocks and bonds and real estate and all other assets

Question 7

Which of the following functions of money is also a common function of most other financial assets?

Accepted Answer

A) a unit of account 
B) a store of value 
C) medium of exchange 
D) None of the above is correct. 
A) a unit of account 
B) a store of value 
C) medium of exchange 
D) None of the above is correct.

Question 8

Which of the following best illustrates the medium of exchange function of money?

Accepted Answer

A) You keep some money hidden in your shoe. 
B) You keep track of the value of your assets in terms of currency. 
C) You pay for your oil change using currency. 
D) None of the above is correct. 
A) You keep some money hidden in your shoe. 
B) You keep track of the value of your assets in terms of currency. 
C) You pay for your oil change using currency. 
D) None of the above is correct.

Question 9

The set of items that serve as media of exchange clearly includes

Accepted Answer

A) balances that lie behind debit cards. 
B) demand deposits. 
C) other checkable deposits. 
D) All of the above are correct. 
A) balances that lie behind debit cards. 
B) demand deposits. 
C) other checkable deposits. 
D) All of the above are correct.

Question 10

Traveler's checks are included in

Accepted Answer

A) M1 but not M2. 
B) M2 but not M1. 
C) M1 and M2. 
D) neither M1 nor M2. 
A) M1 but not M2. 
B) M2 but not M1. 
C) M1 and M2. 
D) neither M1 nor M2.

Question 11

Which of the following might explain why the United States has so much currency per person?

Accepted Answer

A) U.S.citizens are holding a lot of foreign currency. 
B) Currency may be a preferable store of wealth for criminals. 
C) People use credit and debit cards more frequently. 
D) All of the above help explain the abundance of currency. 
A) U.S.citizens are holding a lot of foreign currency. 
B) Currency may be a preferable store of wealth for criminals. 
C) People use credit and debit cards more frequently. 
D) All of the above help explain the abundance of currency.

Question 12

Currency includes

Accepted Answer

A) paper bills and coins. 
B) demand deposits. 
C) credit cards. 
D) Both (a)and (b)are correct. 
A) paper bills and coins. 
B) demand deposits. 
C) credit cards. 
D) Both (a)and (b)are correct.

Question 13

Many societies used gold as money,because

Accepted Answer

A) it is relatively rare. 
B) it is durable. 
C) it has a relatively low melting point. 
D) All of the above are correct. 
A) it is relatively rare. 
B) it is durable. 
C) it has a relatively low melting point. 
D) All of the above are correct.

Question 14

You pay for cheese and bread from the deli with currency.Which function of money does this best illustrate?

Accepted Answer

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

Question 15

Imagine an economy in which: (1)pieces of paper called yollars are the only thing that buyers give to sellers when they buy goods and services,so it would be common to use,say,50 yollars to buy a pair of shoes; (2)prices are posted in terms of yardsticks,so you might walk into a grocery store and see that,today,an apple is worth 2 yardsticks;and (3)yardsticks disintegrate overnight,so no yardstick has any value for more than 24 hours.In this economy,

Accepted Answer

A) the yardstick is a medium of exchange but it cannot serve as a unit of account. 
B) the yardstick is a unit of account but it cannot serve as a store of value. 
C) the yardstick is a medium of exchange but it cannot serve as a store of value,and the yollar is a unit of account. 
D) the yollar is a unit of account,but it is not a medium of exchange and it is not a liquid asset. 
A) the yardstick is a medium of exchange but it cannot serve as a unit of account. 
B) the yardstick is a unit of account but it cannot serve as a store of value. 
C) the yardstick is a medium of exchange but it cannot serve as a store of value,and the yollar is a unit of account. 
D) the yollar is a unit of account,but it is not a medium of exchange and it is not a liquid asset.

Question 16

Money is

Accepted Answer

A) the most liquid asset and a perfect store of value. 
B) the most liquid asset but an imperfect store of value. 
C) not the most liquid asset but a perfect store of value. 
D) neither the most liquid asset and nor a perfect store of value. 
A) the most liquid asset and a perfect store of value. 
B) the most liquid asset but an imperfect store of value. 
C) not the most liquid asset but a perfect store of value. 
D) neither the most liquid asset and nor a perfect store of value.

Question 17

Demand deposits are included in

Accepted Answer

A) M1 but not M2. 
B) M2 but not M1. 
C) M1 and M2. 
D) neither M1 nor M2. 
A) M1 but not M2. 
B) M2 but not M1. 
C) M1 and M2. 
D) neither M1 nor M2.

Question 18

Which of the following is not included in either M1 or M2?

Accepted Answer

A) U.S.Treasury bills 
B) small time deposits 
C) demand deposits 
D) money market mutual funds 
A) U.S.Treasury bills 
B) small time deposits 
C) demand deposits 
D) money market mutual funds

Question 19

Which of the following is an example of commodity money?

Accepted Answer

A) ​Rare baseball cards 
B) ​Euros 
C) ​Stocks 
D) ​The gold standard 
A) ​Rare baseball cards 
B) ​Euros 
C) ​Stocks 
D) ​The gold standard

Question 20

The ease with which an asset can be

Accepted Answer

A) traded for another asset determines whether or not that asset is a unit of account. 
B) transported from one place to another determines whether or not that asset could serve as fiat money. 
C) converted into a store of value determines the liquidity of that asset. 
D) converted into the economy's medium of exchange determines the liquidity of that asset. 
A) traded for another asset determines whether or not that asset is a unit of account. 
B) transported from one place to another determines whether or not that asset could serve as fiat money. 
C) converted into a store of value determines the liquidity of that asset. 
D) converted into the economy's medium of exchange determines the liquidity of that asset.

Exam 16: The Monetary System: The Meaning of Money

Which type of money has intrinsic value?

Which of the following is not included in either M1 or M2?

Which of the following is both a store of value and regularly used as a medium of exchange?

Savings deposits are included in

Any item that people can use to transfer purchasing power from the present to the future is called

Which of the following lists is included in what economists call "money"?

Which of the following functions of money is also a common function of most other financial assets?

Which of the following best illustrates the medium of exchange function of money?

The set of items that serve as media of exchange clearly includes

Traveler's checks are included in

Which of the following might explain why the United States has so much currency per person?

Currency includes

Many societies used gold as money,because

You pay for cheese and bread from the deli with currency.Which function of money does this best illustrate?

Money is

Demand deposits are included in

Which of the following is not included in either M1 or M2?

Which of the following is an example of commodity money?

The ease with which an asset can be

Ten Principles of Economics

Ten Principles of Economics: How People Make Decisions

Ten Principles of Economics: How People Interact

Ten Principles of Economics: How the Economy As a Whole Works

Ten Principles of Economics: Part A

Ten Principles of Economics: Part B

Thinking Like an Economist

Thinking Like an Economist: The Economist As Scientist

Thinking Like an Economist: The Economist As Policy Adviser

Thinking Like an Economist: Why Economists Disagree

Thinking Like an Economist: Lets Get Going

Thinking Like an Economist: Graphing a Brief Review

Thinking Like an Economist: Part A

Thinking Like an Economist: Part B

Interdependence and the Gains From Trade

Interdependence and the Gains From Trade: A Parable for the Modern Economy

Interdependence and the Gains From Trade: Comparative Advantage the Driving Force of Specialization

Interdependence and the Gains From Trade: Applications of Comparative Advantage

Interdependence and the Gains From Trade: Conclusion

Interdependence and the Gains From Trade: Part A

Interdependence and the Gains From Trade: Part B

The Market Forces of Supply and Demand

The Market Forces of Supply and Demand:Markets and Competition

The Market Forces of Supply and Demand: Demand

The Market Forces of Supply and Demand: Supply

The Market Forces of Supply and Demand: Supply and Demand Together

The Market Forces of Supply and DemandConclusion How Prices Allocate Resources

The Market Forces of Supply and Demand: Part A

The Market Forces of Supply and Demand: Part B

Elasticity and Its Applications

Elasticity and Its Applications: The Elasticity of Demand

Elasticity and Its Applications: The Elasticity of Supply

Elasticity and Its Applications: Three Applications of Supply,demand,and Elasticity

Elasticity and Its Applications: Part A

Elasticity and Its Applications: Part B

Supply Demand and Government Policies

Supply Demand and Government Policies: Controls on Prices

Supply Demand and Government Policies: Taxes

Supply Demand and Government Policies: Part A

Supply Demand and Government Policies: Part B

Consumers Producers and the Efficiency of Markets

Consumers Producers and the Efficiency of Markets: Consumer Surplus

Consumers Producers and the Efficiency of Markets: Producer Surplus

Consumers Producers and the Efficiency of Markets: Market Efficiency

Consumers Producers and the Efficiency of Markets: Conclusion Market Efficiency and Market Failure

Consumers Producers and the Efficiency of Markets: Part A

Consumers Producers and the Efficiency of Markets: Part B

Application the Cost of Taxation

Application the Cost of Taxation: The Deadweight Loss of Taxation

Application the Cost of Taxation: The Determinants of the Deadweight Loss

Application the Cost of Taxation: Deadweight Loss and Tax Revenue As Taxes Vary

Application the Cost of Taxation: Conclusion

Application the Cost of Taxation: Part A

Application the Cost of Taxation: Part B

Application International Trade

Application International Trade: The Determinants of Trade

Application International Trade: The Winners and Losers From Trade

Application International Trade: The Arguments for Restricting Trade

Application International Trade: Conclusion

Application International Trade: Part A