Question 1

Dollar bills,rare paintings,and emerald necklaces are all

Accepted Answer

A) media of exchange. 
B) units of account. 
C) stores of value. 
D) All of the above are correct. 
A) media of exchange. 
B) units of account. 
C) stores of value. 
D) All of the above are correct.

Question 2

Credit cards are

Accepted Answer

A) a medium of exchange. 
B) counted as part of M2 but not as part of M1. 
C) important for analyzing the monetary system. 
D) All of the above are correct. 
A) a medium of exchange. 
B) counted as part of M2 but not as part of M1. 
C) important for analyzing the monetary system. 
D) All of the above are correct.

Question 3

The primary difference between commodity money and fiat money is that

Accepted Answer

A) commodity money is a medium of exchange but fiat money is not. 
B) fiat money is a medium of exchange but commodity money is not. 
C) commodity money has intrinsic value but fiat money does not. 
D) fiat money has intrinsic value but commodity money does not. 
A) commodity money is a medium of exchange but fiat money is not. 
B) fiat money is a medium of exchange but commodity money is not. 
C) commodity money has intrinsic value but fiat money does not. 
D) fiat money has intrinsic value but commodity money does not.

Question 4

Fiat money

Accepted Answer

A) is worthless. 
B) has no intrinsic value. 
C) may be used as a medium of exchange,but is not legal tender. 
D) refers to highly liquid assets that do not serve as a medium of exchange. 
A) is worthless. 
B) has no intrinsic value. 
C) may be used as a medium of exchange,but is not legal tender. 
D) refers to highly liquid assets that do not serve as a medium of exchange.

Question 5

For purposes of analyzing the money stock and its relationship to relevant economic variables,money is best thought of as

Accepted Answer

A) those items that can be readily accessed and used to buy goods and services. 
B) currency only. 
C) currency plus all bank accounts. 
D) currency plus all bank accounts plus bonds. 
A) those items that can be readily accessed and used to buy goods and services. 
B) currency only. 
C) currency plus all bank accounts. 
D) currency plus all bank accounts plus bonds.

Question 6

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

Accepted Answer

A) currency 
B) demand deposits 
C) other checkable deposits 
D) All of the above are correct. 
A) currency 
B) demand deposits 
C) other checkable deposits 
D) All of the above are correct.

Question 7

Which of the following best illustrates the concept of a store of value?

Accepted Answer

A) You are a precious-metals dealer,and you are always aware of how many ounces of platinum trade for an ounce of gold. 
B) You sell items on eBay,and your prices are stated in terms of dollars. 
C) You keep 6 ounces of gold in your safe-deposit box at the bank for emergencies. 
D) None of the above is correct. 
A) You are a precious-metals dealer,and you are always aware of how many ounces of platinum trade for an ounce of gold. 
B) You sell items on eBay,and your prices are stated in terms of dollars. 
C) You keep 6 ounces of gold in your safe-deposit box at the bank for emergencies. 
D) None of the above is correct.

Question 8

Small time 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 9

Money market mutual funds are included in

Accepted Answer

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

Question 10

Money is the most liquid asset available because

Accepted Answer

A) it is a store of value. 
B) it is a medium of exchange. 
C) it is a unit of account. 
D) it has intrinsic value. 
A) it is a store of value. 
B) it is a medium of exchange. 
C) it is a unit of account. 
D) it has intrinsic value.

Question 11

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

Accepted Answer

A) demand deposits 
B) corporate bonds 
C) large time deposits 
D) money market mutual funds 
A) demand deposits 
B) corporate bonds 
C) large time deposits 
D) money market mutual funds

Question 12

The legal tender requirement means that

Accepted Answer

A) people are more likely to accept the dollar as a medium of exchange. 
B) the government must hold enough gold to redeem all currency. 
C) people may not make trades with anything else. 
D) All of the above are correct. 
A) people are more likely to accept the dollar as a medium of exchange. 
B) the government must hold enough gold to redeem all currency. 
C) people may not make trades with anything else. 
D) All of the above are correct.

Question 13

When prisoners use cigarettes or some other good as money,cigarettes become

Accepted Answer

A) commodity money,but do not function as a unit of account. 
B) commodity money and function as a unit of account. 
C) fiat money,but do not function as a unit of account. 
D) fiat money and function as a unit of account. 
A) commodity money,but do not function as a unit of account. 
B) commodity money and function as a unit of account. 
C) fiat money,but do not function as a unit of account. 
D) fiat money and function as a unit of account.

Question 14

Most financial assets other than money function as

Accepted Answer

A) a medium of exchange,a unit of account,and a store of value. 
B) a medium of exchange and a store of value,but not a unit of account. 
C) a store of value and a unit of account,but not a medium of exchange. 
D) a store of value,but not a unit of account nor a medium of exchange 
A) a medium of exchange,a unit of account,and a store of value. 
B) a medium of exchange and a store of value,but not a unit of account. 
C) a store of value and a unit of account,but not a medium of exchange. 
D) a store of value,but not a unit of account nor a medium of exchange

Question 15

The amount of currency per person in the United States is about

Accepted Answer

A) $110. 
B) $300. 
C) $2,450. 
D) $4,490. 
A) $110. 
B) $300. 
C) $2,450. 
D) $4,490.

Question 16

The "yardstick" people use to post prices and record debts is called

Accepted Answer

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

Question 17

Which of the following is a function of money?

Accepted Answer

A) a unit of account 
B) a store of value 
C) medium of exchange 
D) All of the above are correct. 
A) a unit of account 
B) a store of value 
C) medium of exchange 
D) All of the above are correct.

Question 18

Treasury Bonds are

Accepted Answer

A) both a store of value and a medium of exchange. 
B) a store of value,but not a medium of exchange 
C) a medium of exchange,but not a store of value. 
D) neither a store of value nor a medium of exchange. 
A) both a store of value and a medium of exchange. 
B) a store of value,but not a medium of exchange 
C) a medium of exchange,but not a store of value. 
D) neither a store of value nor a medium of exchange.

Question 19

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

Accepted Answer

A) currency 
B) demand deposits 
C) savings deposits 
D) All of the above are included in both M1 and M2. 
A) currency 
B) demand deposits 
C) savings deposits 
D) All of the above are included in both M1 and M2.

Question 20

Credit cards

Accepted Answer

A) defer payments. 
B) are a store of value. 
C) have led to wider use of currency. 
D) are part of the money supply. 
A) defer payments. 
B) are a store of value. 
C) have led to wider use of currency. 
D) are part of the money supply.

Exam 16: The Monetary System: The Meaning of Money

Dollar bills,rare paintings,and emerald necklaces are all

Credit cards are

The primary difference between commodity money and fiat money is that

Fiat money

For purposes of analyzing the money stock and its relationship to relevant economic variables,money is best thought of as

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

Which of the following best illustrates the concept of a store of value?

Small time deposits are included in

Money market mutual funds are included in

Money is the most liquid asset available because

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

The legal tender requirement means that

When prisoners use cigarettes or some other good as money,cigarettes become

Most financial assets other than money function as

The amount of currency per person in the United States is about

The "yardstick" people use to post prices and record debts is called

Which of the following is a function of money?

Treasury Bonds are

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

Credit cards

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