1/ The liquidity continuum ...

a)refers to how easy it is to use an asset as a store of value.

b)suggests a share of stock is more liquid than precious metal.

c)is used to argue that checking accounts are not liquid enough to belong in the M1 measure of the money supply.

d)argues that credit cards are a relatively "liquid" form of money.

e)None of these statements is accurate.

2/ When governments pay their bills by "running the printing press", the result is often...

a)deflation.

6/ What is the main difference between M1 and M2 as measures of money?

Question 6 options:

a)M2 includes the value of checking accounts while M1 does not.

b)M2 includes the value of savings accounts while M1 does not.

c)M2 includes the value of traveler's checks while M1 does not.

d)M2 includes the value of government bonds while M1 does not.

e)M2 includes the value of mutual funds while M1 does not.

b)hyperinflation.

c)insufficient aggregate demand.

d)a decline in M1.

e)a decline in M2.

7/ In order for a commodity to be used as money, this commodity must be...

Question 7 options:

a)standardized.

b)durable and portable.

c)scarce.

d)easily divisible.

e)All of the above

9/ A dollar bill in the United States is ...

a)fiat money.

b)commodity money.

c)an illiquid asset.

d)backed by gold.

e)None of the above

14/ Monetary policy impacts GDP mainly through its effect on...

a)government spending.

b)investment.

c)consumption.

d)net exports.

e)taxes.

15 / What does Classical monetary theory state will happen with an increase in the money supply?

a)Prices and GDP will both rise

b)Prices will fall and GDP will rise

c)Prices will rise and GDP will remain the same

d)Prices will rise and GDP will fall

e)Prices will stay the same and GDP will fall

20/ Money neutrality implies that ...

:

a)increasing the money supply will not affect the velocity of money.

b)increasing the money supply will not affect the rate of inflation.

c)increasing the money supply will not affect the level of output.

d)increasing the money supply will not affect the interest rate.

e)increasing the money supply will not affect the federal funds rate.