3. Which of the following items are money and perform all functions of money, and which items are not money and perform only some functions of money? ( 2 points)

a. A dime

b. U.S saving bond

c. A debit card

d. A credit card

5. Monica transfers $10,000 from her savings account at the Bank of Alaska to her money market fund. What is the immediate change in M1 and M2? (1 point)

6. Suppose that this year the money supply ( Ms) is $500 billions, nominal GDP (P x Q) is $10 trillions, and Real GDP (Q) is $5trillions. ( 1 point)

All underlying work must be shown to receive full credit

a. What is the price level in the economy this year?

b. How often is dollar spent on the economy output this year?

Extra Points (3 points)

1. Briefly explain whether you agree with the following statement:” I recently read that more than half of the money issued by the government is actually held by people in foreign countries. If this is true, the United States is less than half wealthy as the government statistics indicate”.

2. Was money a better store of value in the United States in the 1950s than it was in the 1970s? Why or why not? In which period would you have been willing to hold money? Why?

3. Suppose that debit cards, ATM, and other forms electronic funds transfer did not exist.

a. How would this change the way you shop and pay bills?

b. How would transaction costs in the economy be affected?