Question 1

Paper currency that has been declared legal tender but is not convertible into coins or precious metals is called ________ money.

Accepted Answer

A)  commodity
B)  fiat
C)  electronic
D)  funnyE) C) and D)
F) A) and B)

Question 2

The decade during which the growth rates of monetary aggregates diverged the most is

Accepted Answer

A)  the 1960s.
B)  the 1970s.
C)  the 1980s.
D)  the 1990s.E) B) and D)
F) A) and B)

Question 3

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.E) A) and D)
F) None of the above

Question 4

An electronic payments system has not completely replaced the paper payments system because of all of the following reasons except

Accepted Answer

A)  expensive equipment is necessary to set up the system.
B)  security concerns.
C)  privacy concerns.
D)  transportation costs.E) None of the above
F) B) and C)

Question 5

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 transfersE) None of the above
F) B) and C)

Question 6

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.E) A) and B)
F) All of the above

Question 7

________ money could be used for some other purpose other than as a medium of exchange,for example,gold coins could be melted down and turned into gold jewelry.

Accepted Answer

A)  Commodity
B)  Fiat
C)  Paper
D)  ElectronicE) A) and B)
F) All of the above

Question 8

________ is the relative ease and speed with which an asset can be converted into a medium of exchange.

Accepted Answer

A)  Efficiency
B)  Liquidity
C)  Deflation
D)  SpecializationE) B) and C)
F) A) and B)

Question 9

Since it does not have to be converted into anything else to make purchases,________ is the most liquid asset.

Accepted Answer

A)  money
B)  stock
C)  artwork
D)  goldE) C) and D)
F) B) and D)

Question 10

Of the following assets,the least liquid is

Accepted Answer

A)  stocks.
B)  traveler's checks.
C)  checking deposits.
D)  a house.E) None of the above
F) A) and D)

Question 11

The components of the U.S.M1 money supply are demand and checkable deposits plus

Accepted Answer

A)  currency.
B)  currency plus savings deposits.
C)  currency plus travelers checks.
D)  currency plus travelers checks plus money market deposits.E) None of the above
F) All of the above

Question 12

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

Accepted Answer

A)  NOW accounts
B)  Demand deposits
C)  Currency
D)  Money market mutual fund shares (retail) E) None of the above
F) C) and D)

Question 13

________ is the narrowest monetary aggregate that the Fed reports.

Accepted Answer

A)  M0
B)  M1
C)  M2
D)  M3E) A) and B)
F) A) and C)

Question 14

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.E) A) and B)
F) B) and C)

Question 15

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.E) A) and C)
F) None of the above

Question 16

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 17

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.E) A) and D)
F) B) and C)

Question 18

A smart card is the equivalent of

Accepted Answer

A)  cash.
B)  savings bonds.
C)  savings deposits.
D)  certificates of deposit.E) B) and C)
F) None of the above

Question 19

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.E) C) and D)
F) B) and D)

Question 20

________ is a flow of earnings per unit of time.

Accepted Answer

A)  Income
B)  Money
C)  Wealth
D)  CurrencyE) B) and C)
F) All of the above

Exam 3: What Is Money

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

Correct AnswerverifiedShow Answer

An electronic payments system has not completely replaced the paper payments system because of all of the following reasons except

Correct AnswerverifiedShow Answer

A smart card is the equivalent of

Correct AnswerverifiedShow Answer

The decade during which the growth rates of monetary aggregates diverged the most is

Correct AnswerverifiedShow Answer

________ is the relative ease and speed with which an asset can be converted into a medium of exchange.

Correct AnswerverifiedShow Answer

The components of the U.S.M1 money supply are demand and checkable deposits plus

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Since it does not have to be converted into anything else to make purchases,________ is the most liquid asset.

Correct AnswerverifiedShow Answer

Paper currency that has been declared legal tender but is not convertible into coins or precious metals is called ________ money.

Correct AnswerverifiedShow Answer

________ money could be used for some other purpose other than as a medium of exchange,for example,gold coins could be melted down and turned into gold jewelry.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Of the following assets,the least liquid is

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedThe equipment necessary to set up the sy...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

________ is the narrowest monetary aggregate that the Fed reports.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The currency component includes paper money and coins held in

Correct AnswerverifiedShow Answer

________ is a flow of earnings per unit of time.

Correct AnswerverifiedShow Answer

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The equipment necessary to set up the sy...
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