chapter 14 example #53256

$70 price tag on a sweater in a department store window is an example of money functioning as a: A) unit of account. B) standard of deferred payments. C) store of value. D) medium of exchange.

When economists say that money serves as a medium of exchange, they mean that it is: A) a way to keep wealth in a readily spendable form for future use. B) a means of payment. C) a monetary unit for measuring and comparing

When economists say that money serves as a unit of account, they mean that it is: A) away to keep wealth in a readily spendable form for future use. B) a means of payment. C) a monetary unit for measuring and comparing the relative values of goods. D) declared as legal tender

When economists say that money serves as a store of value, they mean that it is: A) a way to keep wealth in a readily spendable form for future use. B) a means of payment. C) a monetary unit for measuring and comparing the relative values of goods. D) declared as legal tender

The paper money used in the United States is: A) National Bank Notes. B) Treasury Notes. C) United States Notes. D) Federal Reserve Notes.

In the United States, the money supply (M1) is comprised of: A) coins, paper currency, and checkable deposits. B) currency, checkable deposits, and Series E bonds. C) coins, paper currency, checkable deposits, and credit balances with brokers. D) paper currency,

The purchasing power of the dollar: A) has been increasing in recent years because of economic growth. B) varies directly with the cost-of-living index. C) is inversely related to the level of aggregate demand. D) is the reciprocal of the price level.

The value of money varies: A) inversely with the price level. C) directly with the price level. B) directly with the volume of employment. D) directly with the interest rate.

If the price index rises from 100 to 120, the purchasing power value of the dollar: A) may either rise or fall. C) will fall by one-sixth. B) will rise by one-sixth. D) will rise by 20 percent.

26. Other things equal, an excessive increase in the money supply will : A) increase the purchasing power of each dollar. B) decrease the purchasing power of each dollar. C) have no impact on the purchasing power of the dollar. D) reduce the price level.

If P equals the price level expressed as an index number and D equals the value of the dollar, then: A) P = D - 1. B) D = 1/P. C) 1 = D/P. D) D = P - 1.

Answer the next question(s) on the basis of the following table: Year Price level Value of dollar 1 1.00 $1.00 2 1.25 3 .80 4 .50 Type: T Topic: 2 E: 237 MA: 237 28. Refer to the above table. The value of the dollar in year 2 is: A) $1.25. B) $1.33. C) $.80. D) $1.00.

29. Refer to the above table. The value of the dollar in year 3 is: A) $1.00. B) $1.25. C) $.80. D) $.50.

Refer to the above table. The value of the dollar in year 4 is: A) $.25. B) $.33. C) $.50. D) $2.00.

Which of the following is not part of the M2 money supply? A) money market mutual fund balances B) money market deposit accounts C) currency D) large ($100,000 or more) time deposits

The M2 money supply includes: A) stock certificates. B) corporate bond certificates. C) the cash value of life insurance policies. D) individual shares in money market mutual funds.

A checking account entry is money because it: A) is ensured by the Federal Deposit Insurance Corporation. B) has been declared as such by the Federal government. C) performs the functions of money. D) can be sold for currency.

Currency in circulation is part of: A) M1 only. B) M2 only. C) M3 only. D) M1, M2, and M3.

Money market deposit accounts are included in: A) M1 only. B) both M1 and M2. C) both M2 and M3. D) M3 only.

Checkable deposits are: A) included in M1. C) considered to be a near money. B) not included in either Ml or M2. D) also called time deposits.

Checkable deposits are: A) included in M1 but not in M2. C) included in M1 and in M2. B) considered to be a near-money. D) also called time deposits.

The amount of money reported as M2: A) is smaller than the amount reported as M1. B) is larger than the amount reported as M1. C) excludes coins and currency. D) includes large ($100,000 or more) certificates of deposit.

The largest component of the money supply is: A) coins. B) paper money. C) checkable deposits. D) stock certificates.

40. Paper money (currency) in the United States is issued by the: A) United States Mint. B) Federal Reserve Banks. C) United States Treasury. D) national banks.

A $20 bill is a: A) gold certificate. B) Treasury note. C) Treasury bill. D) Federal Reserve Note.

Coins in people's pockets and purses are: A) included in M1, but not in M2. B) included in both M1 and in M2. C) included in M2, but not in M1. D) excluded from M1 and M2 because people can exchange them for Federal Reserve notes.

Coins held in commercial banks are: A) included in M1, but not in M2. C) included in M2, but not in M1. B) included both in M1 and in M2. D) not part of the nation's money supply.

Checkable deposits include: A) both large and small time deposits. B) the deposits of banks and thrifts on which checks can be written. C) only the checkable deposits of commercial banks. D) only the checkable deposits of thrift institutions.

The difference between M1 and M2 is that: A) the former includes time deposits. B) the latter includes small time deposits, noncheckable savings accounts, money market deposit accounts, and money market mutual fund balances. C) the latter includes negotiable government bonds. D) the latter includes cash held by commercial banks and the U.S. Treasury.