macro chapter 14 example #45693

When economists say that money serves as a store of value, they mean that it is: 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 by the government.

Refer to the information. Money supply M2 for this economy is: a.) $480. b.) $130. c.) $490. d.) $630.

Refer to the information. Money supply M1 for this economy is: a.) $60. b.) $70. c.) $130. d.) $140.

Checkable deposits are: a.) included in M1. b.) not included in either Ml or M2. c.) considered to be a near money. d.) also called time deposits.

The paper money used in the United States is: a.) National Bank Notes. b.) Treasury Notes. c.) United States Notes. d.) Federal Reserve Notes.

Stock market price quotations best exemplify money serving as a: a.) store of value. b.) unit of account. c.) medium of exchange. d.) index of satisfaction.

Currency in circulation is part of: a.) M1 only. b.) M2 not including M1. c.) neither M1 nor M2. d.) both M1 and M2.

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-denominated time deposits

The difference between M1 and M2 is that: a.) the former includes time deposits. b.) the latter includes small-denominated 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.

(Consider This) Which of the following is not part of the M2 money supply? a.) Currency in circulation. b.) Credit card balances. c.) Small-denominated time deposits of less than $100,000. d.) Checkable deposits.

To say that the Federal Reserve Banks are quasi-public banks means that: a.) they are privately owned but managed in the public interest. b.) they deal only with banks of foreign nations and do not have direct business contact with U.S. banks. c.) they deal only with commercial banks, and not the public. d.) they are publicly owned but privately managed.

The group that sets the Federal Reserve System's policy on buying and selling government securities (bills, notes, and bonds) is the: a.) Federal Deposit Insurance Corporation (FDIC). b.) Federal Bond Sale Authority. c.) Council of Economic Advisers. d.) Federal Open Market Committee (FOMC).

As it relates to Federal Reserve activities, the acronym FOMC describes the: a.) Federal Open Market Committee. b.) Federal Options Market Committee. c.) Federal Organization for Monetary Control. a.) Federal Organization for Money Creation.

If P equals the price level expressed as an index number and $V equals the value of the dollar, then: a.) P = $V - 1. b.) $V = 1/P. c.) 1 = $V/P. d.) $V = P - 1.

The Federal Deposit Insurance Corporation (FDIC) insures deposits up to $250,000 in: a.) mutual fund companies and pension fund companies. b.) thrifts and insurance companies. c.) commercial banks and thrifts. d.) securities firms and insurance companies.

Refer to the table. The value of the dollar in year 3 is: a.) $1.20. b.) $1.25. c.) $0.80. d.) $1.10.

In the U.S. economy, the money supply is controlled by the: a.) U.S. Treasury. b.) Federal Reserve System. c.) Senate Committee on Banking and Finance. d.) Congress.

During periods of rapid inflation, money may cease to work as a medium of exchange: a.) unless it has been designated legal tender. b.) unless it is backed by gold. c.) because it is too scarce for everyone to have enough for transactions. d.) because people and businesses will not want to accept it in transactions.

Checkable deposits are classified as money because: a.) they can be readily used in purchasing goods and paying debts. b.) banks hold currency equal to the value of their checkable deposits. c.) they are ultimately the obligations of the Treasury. d.) they earn interest income for the depositor.

Refer to the table. The value of the dollar in year 2 is: a.) $1.25. b.) $1.33. c.) $0.80. d.) $0.75.

Answer the question on the basis of the following list of assets: 1. Large-denominated ($100,000 and over) time deposits 2. Noncheckable savings deposits 3. Currency (coins and paper money) in circulation 4. Small-denominated (under $100,000) time deposits 5. Stock certificates 6. Checkable deposits 7. Money market deposit accounts 8. Money market mutual fund balances held by individuals 9. Money market mutual fund balances held by businesses 10. Currency held in bank vaults Refer to the given list. The M1 definition of money comprises item(s): a.) 6 only. b.) 3, 4, and 6. c.) 3 and 6. d.) 3, 6, and 10.

If you are estimating your total expenses for school next semester, you are using money primarily as: a.) a medium of exchange. b.) a store of value. c.) a unit of account. d.) an economic investment.

What does it mean when economists say that home buyers are "underwater" on their mortgages? a.) Buyers owe more on their mortgage than the properties are worth. b.) Buyers are financially incapable of repaying their mortgages and bankruptcy is inevitable. c.) Buyers are purchasing homes on flood plains and are highly susceptible to financial losses. d.) Buyers are paying interest rates substantially higher than current market interest rates, creating interest payments that create financial hardship.

Currency held in the vault of First National Bank is: a.) counted as part of M1. b.) counted as part of M2 but not M1. c.) only counted as part of M1 if it was deposited into a checking account. d.) not counted as part of the money supply.

Answer the question on the basis of the following list of assets: 1. Large-denominated ($100,000 and over) time deposits 2. Noncheckable savings deposits 3. Currency (coins and paper money) in circulation 4. Small-denominated (under $100,000) time deposits 5. Stock certificates 6. Checkable deposits 7. Money market deposit accounts 8. Money market mutual fund balances held by individuals 9. Money market mutual fund balances held by businesses 10. Currency held in bank vaults Refer to the given list. The assets that are not included in either M1 or M2 are: a.) Items 1, 5, 9, and 10. b.) Items 2, 5, 8, and 9. c.) Items 1, 3, 5, 7, and 9. d.) All of the ten items listed.

Near-monies: a.) include all financial and real assets that can be easily converted into currency. b.) are certain highly liquid financial assets that do not function directly as a medium of exchange but can be readily converted into M1. c.) are excluded from M2 because they are highly liquid. d.) are defined as monetary balances that are immediately available, at zero cost, for household and business transactions.

Money market deposit accounts are included in: a.) M1 only. b.) M2 only. c.) neither M1 nor M2. d.) both M1 and M2.

In defining money as M1, economists exclude time deposits because: a.) the intrinsic value of time deposits is nil. b.) the purchasing power of time deposits is much less stable than that of checkable deposits and currency. c.) they are not directly or immediately a medium of exchange. d.) they are not recognized by the federal government as legal tender.

If you place a part of your summer earnings in a savings account, you are using money primarily as a: a.) medium of exchange. b.) store of value. c.) unit of account. d.) standard of value.

Stabilizing a nation's price level and the purchasing power of its money can be achieved: a.) only with fiscal policy. b.) only with monetary policy. c.) with both fiscal and monetary policy. d.) with neither fiscal nor monetary policy.

Which one of the following is true about the U.S. Federal Reserve System? a.) There are 12 regional Federal Reserve Banks. b.) The head of the U.S. Treasury also chairs the Federal Reserve Board. c.) There are 14 members of the Federal Reserve Board. d.) The Open Market Committee is smaller in size than the Federal Reserve Board.

Assuming no other changes, if checkable deposits increase by $40 billion and currency in circulation decreases by $40 billion, the: a.) M1 money supply will decline. b.) M1 money supply will not change. c.) M2 money supply will decline. d.) M2 money supply will increase.

To say money is socially defined means that: a.) money has been defined in a Constitutional amendment. b.) whatever performs the functions of money extremely well is considered to be money. c.) the money supply includes all public and private securities purchased by society. d.) society, acting through Congress, specifies what shall be included in the money supply.

If the price index rises from 100 to 120, the purchasing power value of the dollar: a.) may either rise or fall. b.) will rise by one-sixth. c.) will fall by one-sixth. d.) will rise by 20 percent.

The M2 money supply includes: a.) stock certificates. b.) currency in bank vaults. c.) the cash value of life insurance policies. d.) individual shares in money market mutual funds.

Money functions as: a.) a store of value. b.) a unit of account. c.) a medium of exchange. d.) all of these.

The purchasing power of money and the price level vary: a.) inversely. b.) directly during recessions but inversely during inflations. c.) directly but not proportionately. d.) directly and proportionately.