Question
When money is accepted as payment in a markettransaction, it is functioning as a A. medium of exchange. B. store of value. C. unit of
When money is accepted as payment in a markettransaction, it is functioning as a
A.
medium of exchange.
B.
store of value.
C.
unit of accounting.
D.
unit of investment.
What characteristic defines something asmoney?
A.
notes you can deposit in a savings account
B.
a medium of exchange widely accepted in an economy
C.
assets declared by the government to be of value
D.
an asset that earns interest
Which function of money allows people to specialize in areas in which they have a comparativeadvantage?
A.
Standard of deferred payment
B.
Store of value
C.
Medium of exchange
D.
Unit of accounting
A property of an asset that makes it desirable for use as a means of settling debts maturing in the future isa(n)
A.
standard of deferred payment.
B.
store of value.
C.
medium of exchange.
D.
unit of accounting.
An asset is liquid if it
A.
can be obtained or disposed of without losing much of its nominal value.
B.
is of intrinsic value.
C.
is a store of value.
D.
can be exchanged for other goods and services.
In a fiduciary monetarysystem, money is backed by
A.
the assets of the institutions that issue the various assets used as money.
B.
the intrinsic value of the materials used to make the assets.
C.
thepublic's confidence about the general acceptability of the money.
D.
gold.
The opportunity cost of holding money
A.
refers to the amount of paper currency held by the Fed.
B.
equals the amount paid for renting a house instead of buying it.
C.
is based on the fiduciary monetary system.
D.
is measured by the alternative interest yield obtainable by holding some other asset.
The designate M1 measure of money consists of
A.
small time deposits only.
B.
the most liquid types of money in the U.S. system.
C.
gold and gold coins.
D.
credit cards and ATM cards.
Traveler's check are
A.
not part of M1 or M2.
B.
part of M1 but not M2.
C.
part of M2 but not M1.
D.
part of M1 and M2.
According to the table to theright, the value of M1 is
A.
$1,888 billion.
B.
$1,629 billion.
C.
$1,313 billion.
D.
$1,205 billion.
Financial intermediaries are institutions that
A.
provide checking accounts.
B.
transfer funds in the form of loans from savers to investors.
C.
create money.
D.
set interest rates.
Which of the following describes a moral hazardproblem?
A.
apost-contractual problem that may result because participants to the exchange process have information that allows them to act in an opportunistic manner
B.
a process by which individuals have substantial resources devoted to the exchange process and need to make a profit or they will be adversely affected
C.
a contractual problem that results because monopolies exist in all economies
D.
a process by which individual buyers or sellers with better information are more likely to participate in voluntary exchange
The Fed is said to be the"lender of lastresort" in that
A.
it makes loans to individuals whom commercial banks do not believe arecredit-worthy.
B.
it functions as thegovernment's bank only when commercial banks fail to do so.
C.
it charges a higher interest rate to borrowers than does any other bank.
D.
Which of the following is NOT a function of the Federal ReserveSystem?
A.
The Fed acts as fiscal agent for the United States Department of the Treasury.
B.
The Fed determines government spending and taxation policies.
C.
The Fed supplies the economy with fiduciary currency.
D.
The Fed holds reserves of depository institutions.
Under a fractional reserve bankingsystem,
A.
banks keep all of their reserves on hand as deposits.
B.
banks keep all of their deposits on hand as reserves.
C.
banks keep a fraction of their deposits on hand as reserves.
D.
banks keep a fraction of their reserves on hand as deposits.
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