Question 1-2 pts

Sayid puts $2,000 per year into his retirement account, but Aseem waits 10 years and then puts $15,000 into his retirement account. Both men choose the same allocation of assets, and do not put any additional money into their accounts. All other things remaining equal, in the long run:

Group of answer choices

Sayid and Aseem will have the same amount of money in their retirement accounts.

Aseem will have more money in his retirement account than Sayid.

Sayid will have more money in his retirement account than Aseem.

Aseem's portfolio has more risk than Sayid's.

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Question 2-2 pts

Which of these statements is TRUE?

Group of answer choices

M1 contains currency, checkable deposits, and savings accounts.

M2 contains checkable deposits however M1 does not.

M1 contains currency; however M2 does not.

M2 contains savings account balances; however, M1 does not.

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Question 32 pts

Most individuals with average wealth choose to save their money using a financial intermediary such as a bank or a mutual fund. However, individuals with greater wealth are more likely to invest in individual stocks or directly in new or existing businesses. Which statement explains the role of financial intermediaries? They:

Group of answer choices

increase transaction costs of borrowers and savers.

diversify assets to increase risks.

reduce information costs of borrowers and savers.

encourage individuals to save more money.

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Question 42 pts

If consumers expect economic conditions to deteriorate in the future, the loanable funds theory suggests that the:

Group of answer choices

demand for loanable funds will increase.

market interest rate will decrease.

supply of loanable funds will increase.

level of consumption in the economy will increase.

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Question 52 pts

Fiat money is defined as one that:

Group of answer choices

has intrinsic value because it is made with gold, silver, or another precious metal.

does not have check-writing or debit capabilities.

consists of goods and services that are exchanged for other goods and services.

is accepted as money because the government has decreed it to be money.

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Question 62 pts

A price tag on a watch is an example of money functioning as a(n):

Group of answer choices

medium of exchange.

store of value.

unit of account.

store of purchasing power.

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Question 72 pts

What do you mean by the term 'barter'?

Group of answer choices

It is the direct exchange of goods and services for other goods and services.

It is a medium of exchange where goods and services are traded for gold and silver.

It is the measure of the liquidity of money.

It is a yardstick to measure the value of a wide variety of goods and services.

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Question 82 pts

Currency is included:

Group of answer choices

only in M1.

only in M2.

neither in M1 nor in M2.

in both M1 and M2.

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Question 92 pts

When the real interest rate increases:

Group of answer choices

the quantity demanded for loanable funds decreases and the quantity supplied increases.

the quantity demanded for loanable funds increases and the quantity supplied decreases.

the quantity demanded for loanable funds decreases and the quantity supplied decreases.

the quantity demanded for loanable funds increases and the quantity supplied increases.

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Question 102 pts

The demand for loanable funds comes from people who want to:

Group of answer choices

save their money in a bank.

invest their money in savings bonds.

spend money that they have not yet earned.

earn interest.

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Question 112 pts

If M1 increases by $4 million, by how much does M2 increase?

Group of answer choices

$2 million

$4 million

$6 million

$8 million

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Question 122 pts

Which statement explains what happens to savings if the real interest rate increases? What happens to the demand for borrowing?

Group of answer choices

The real interest rate has no effect on savings or the demand for borrowing.

It causes an increase in savings account balances and a decline in the demand for borrowing.

It causes a decrease in savings account balances but has no effect on the demand for borrowing.

It causes a decrease in savings account balances and an increase in the demand for borrowing.

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Question 132 pts

Identify an asset that is the most liquid and an asset that is the least liquid from the following list of assets. Assets: a house (real estate); cash; a one-carat diamond; a savings account; 100 shares of Google; a Harley Davidson motorcycle; a checking account; your old leather jacket.

Group of answer choices

most liquid is cash; least liquid is your old leather jacket

most liquid is cash; least liquid is a house

most liquid is a savings account; least liquid is a one-carat diamond

most liquid is a checking account; least liquid is a savings account

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Question 142 pts

All of these are true of the financial system EXCEPT that:

Group of answer choices

savings deposit is not a part of the M2 money supply.

goods are exchanged for gold in the barter system of exchange.

fiat money has intrinsic value because it is backed by gold and silver.

measure of productivity is a function of money.

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Question 152 pts

Which of these statements about bond prices and interest rates in an economy is TRUE?

Group of answer choices

Bond prices and interest rates share a positive relationship.

Bond prices and interest rates share an inverse relationship.

Bonds are issued with flexible coupon interest rates.

Bond prices and interest rates are unrelated, that is changes in interest rates have no effect on bond prices and vice versa.

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Question 162 pts

Which asset is not part of M1?

Group of answer choices

other checkable deposits

savings deposits

currency

traveler's checks

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Question 172 pts

How much of M1 does currency represent?

Group of answer choices

slightly more than 25%

slightly less than 50%

almost 75%

90%

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Question 182 pts

What is the price of a bond that has an interest payment of $100 and a yield of 5%?

Group of answer choices

$1,000

$2,000

$3,000

$4,000

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Question 192 pts

Rising home prices and a surging stock market resulted in an increase in the net worth of U.S. households in 2013. According to the loanable funds theory, this increase should cause a(n):

Group of answer choices

increase in the demand for loanable funds.

decrease in the demand for loanable funds.

increase in the supply for loanable funds.

decrease in the supply for loanable funds.

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Question 202 pts

Which statement is TRUE?

Group of answer choices

The less the risk involved, the lower the average annual return on investment, all other things being equal.

The greater the risk involved, the lower the average annual return on investment, all other things being equal.

The lower the risk involved, the greater the average annual return on investment, all other things being equal.

Risk and return are inversely related, all other things being equal.