17. During the Civil War, the North issued currency, known as "greenbacks". Which of the following is true of A. Greenbacks are still legal tender in the U.S. B. Greenbacks were tied to the value of gold and silver. C. The South used "greenbacks" to pay for salaries and supplies. D. Greenbacks are a historical example of commodity money 18. Ava buys a $2,000 computer using a paper check. At which step does $2,000 get recorded in M1? A. When Ava hands the $2,000 check to the computer merchant. B. Once the $2000 is credited to the merchant bank's reserve account and is debited from Ava's bank account. C. Once the Federal Reserve sends the paper check (or an electronic image) to Ava's bank. D. The check is never M1. The $2000 is M1 both in Ava's bank account and, later, in the merchant's account. It is the deposit balance that is counted. 19. After the Revolutionary War, the U.S. monetary system was based on gold. Historically, why did the U.S. adopt the use of gold as a currency? How does this compare with the currency used today? 20. In the chapter you read that it costs the U.S. Treasury's Bureau of Engraving and Printing around nine cents to print a note (currency), whether that bill is a one-dollar or one-hundred dollar bill. It seems the Treasury could generate a nice profit for the government by simply printing currency and using this currency to purchase the goods and services the government needs. In fact, this seems to be a way to eliminate the problem of budget deficits for the U.S. government. Comment on this idea. 21. Agencies exist which rate bonds based on characteristics of the borrower Such bond rating agencies are an example of a financial market response designed to: A. increase information asymmetry B. decrease the real return to bondholders. C. provide a lower cost solution to the high cost of information D, transfer risk from the buyer to the rating agency