d.
neither demand deposits nor money market mutual funds
58. Which list ranks assets from most to least liquid?
a.
currency, demand deposits, money market mutual funds
b.
currency, money market mutual funds, demand deposits
c.
money market mutual funds, demand deposits, currency
d.
demand deposits, money market mutual funds, currency
59. The measure of the money stock called M1 includes
a.
wealth held by people in their checking accounts.
b.
wealth held by people in their savings accounts.
c.
wealth held by people in money market mutual funds.
d.
everything that is included in M2 plus some additional items.
60. M1 equals currency plus demand deposits plus
a.
nothing else.
b.
other checkable deposits.
c.
traveler’s checks plus other checkable deposits.
d.
traveler’s checks plus other checkable deposits plus savings deposits.
61. M1 includes
a.
currency.
b.
demand deposits.
c.
traveler’s checks.
d.
All of the above are correct.
62. M1 includes
a.
small time deposits.
b.
savings deposits.
c.
other checkable deposits.
d.
money market mutual funds.
63. In measuring the stock of money in the U.S., M1 includes
a.
traveler’s checks.
b.
savings deposits.
c.
credit cards
d.
none of the above.
64. Which of the following is not included in M1?
a.
currency
b.
demand deposits
c.
savings deposits
d.
traveler’s checks
65. Which of the following is not included in M1?
a.
currency
b.
demand deposits
c.
traveler’s checks
d.
credit cards
66. Which of the following is not included in M1?
a.
a $5 bill in your wallet
b.
$100 in your checking account
c.
$500 in your savings account
d.
All of the above are included in M1.
67. Which of the following items is not included in the most narrow definition of money, M1?
a.
currency
b.
savings deposits
c.
traveler’s checks
d.
demand deposits
68. Which of the following items is included in M2?
a.
credit cards
b.
money market mutual funds
c.
corporate bonds
d.
large time deposits
69. Which of the following statements is correct?
a.
All items that are included in M1 are included also in M2.
b.
All items that are included in M2 are included also in M1.
c.
Credit cards are included in both M1 and M2.
d.
Savings deposits are included in both M1 and M2.
70. Which of the following is included in both M1 and M2?
a.
savings deposits
b.
demand deposits
c.
small time deposits
d.
money market mutual funds
71. Which of the following is not included in either M1 or M2?
a.
U.S. Treasury bills
b.
small time deposits
c.
demand deposits
d.
money market mutual funds
72. Which of the following is not included in either M1 or M2?
a.
money market deposit accounts
b.
large time deposit
c.
demand deposits
d.
money market mutual funds
73. Money market mutual funds are included in
a.
M1 but not M2.
b.
M1 and M2.
c.
M2 but not M1.
d.
neither M1 nor M2.
74. Demand deposits are included in
a.
M1 but not M2.
b.
M2 but not M1.
c.
M1 and M2.
d.
neither M1 nor M2.
75. Which of the following is included in both M1 and M2?
a.
currency
b.
demand deposits
c.
other checkable deposits
d.
All of the above are correct.
76. Which of the following is included in M2 but not in M1?
a.
currency
b.
demand deposits
c.
savings deposits
d.
All of the above are included in both M1 and M2.
77. Which of the following is included in M2 but not in M1?
a.
demand deposits
b.
corporate bonds
c.
large time deposits
d.
money market mutual funds
78. Which of the following is included in M1 and M2?
a.
traveler’s checks
b.
savings deposits
c.
money market mutual funds
d.
small time deposits
79. Traveler’s checks are included in
a.
M1 but not M2.
b.
M2 but not M1.
c.
M1 and M2.
d.
neither M1 nor M2.
80. Savings deposits are included in
a.
M1 but not M2.
b.
M2 but not M1.
c.
M1 and M2.
d.
neither M1 nor M2.
81. Small time deposits are included in
a.
M1 but not M2.
b.
M2 but not M1.
c.
M1 and M2.
d.
neither M1 nor M2.
82. If traveler’s checks were $1000 higher and saving deposits were $500 higher, M1 would be
a.
$500 higher and M2 would be $1,500 higher.
b.
$1,000 higher and M2 would be $1,500 higher.
c.
M2 and M1 would be $1,500 higher.
d.
$1,000 high and M2 would be $500 higher.
83. John and Jane decide to go on a vacation. As a result, they withdraw $2,500 from their savings account to purchase
$2,500 worth of traveler’s checks. As a result of these changes,
a.
M1 increases by $2,500 and M2 decreases by $2,500.
b.
M1 increases by $2,500 and M2 stays the same.
c.
M1 and M2 stay the same.
d.
M1 decreases by $2,500 and M2 increases by $2,500.
84. Derek decides to forego a major appliance purchase and save the money. He transfers $2,100 from his checking
account to his money market mutual fund. As a result of this transfer,
a.
both M1 and M2 decrease by $2,100.
b.
M1 increases by $2,100 and M2 increases by $2,100.
c.
M1 decreases by $2,100 and M2 increases by $2,100.
d.
M1 decreases by $2,100 and M2 stays the same.
85. Jim transfers money from his money market account to his savings account. This action
a.
reduced M1 and increases M2.
b.
increases M1 and reduces M2.
c.
has no effect on M1 or M2.
d.
increases M1 and M2.
86. Credit card limits are included in
a.
M1 but not M2.
b.
M2 but not M1.
c.
M1 and M2.
d.
neither M1 nor M2.
87. Credit cards
a.
defer payments.
b.
are a store of value.
c.
have led to wider use of currency.
d.
are part of the money supply.
88. Credit cards are
a.
a medium of exchange.
b.
counted as part of M2 but not as part of M1.
c.
important for analyzing the monetary system.
d.
All of the above are correct.
89. Credit cards
a.
represent the largest component of M1.
b.
are not included in M1 but are included in M2.
c.
are a form of money unique to the U.S.
d.
are not considered money.
90. Which of the following defer payments?
a.
credit cards and debit cards
b.
neither credit cards nor debit cards
c.
credit cards but not debit cards
d.
debit cards but not credit cards
Table 29–1. The information in the table pertains to an imaginary economy.
Asset
Amount
Small time deposits
$750 billion
Large time deposits
$1,500 billion
Demand deposits
$480 billion
Other checkable deposits
$350 billion
Savings deposits
$4,700 billion
Traveler’s checks
$15 billion
Money market mutual funds
$910 billion
Currency
$1,070 billion
Minor categories of M2
$40 billion
91. Refer to Table 29–1. What is the value of M1 in billions of dollars?
a.
$1,915 billion
b.
$1,900 billion
c.
$2,665 billion
d.
$2,825 billion
92. Refer to Table 29–1. What is the value of M2 in billions of dollars?
a.
$9,815 billion
b.
$8,315 billion
c.
$7,565 billion
d.
$7,405 billion
Table 29–2. The information in the table pertains to an imaginary economy.
Type of Money
Amount
Large time deposits
$120 billion
Small time deposits
$80 billion
Demand deposits
$300 billion
Other checkable deposits
$50 billion
Savings deposits
$65 billion
Traveler’s checks
$5 billion
Money market mutual funds
$200 billion
Currency
$150 billion
Credit card balances
$300 billion
Miscellaneous categories of M2
$30 billion
93. Refer to Table 29-2. What is the M1 money supply?
a.
$705 billion
b.
$570 billion
c.
$505 billion
d.
$585 billion
94. Refer to Table 29-2. What is the M2 money supply?
a.
$1,300 billion
b.
$580 billion
c.
$880 billion
d.
$1,000 billion
95. Given the following information, what are the values of M1 and M2?
Small time deposits
$600 billion
Demand deposits and other checkable deposits
$400 billion
Savings deposits
$800 billion
Money market mutual funds
$700 billion
Traveler’s checks
$30 billion
Large time deposits
$400 billion
Currency
$250 billion
Miscellaneous categories in M2
$20 billion
a.
M1 = $650 billion, M2 = $2,830 billion.
b.
M1 = $400 billion, M2 = $3,080 billion.
c.
M1 = $680 billion, M2 = $2,800 billion.
d.
M1 = $680 billion, M2 = $3,200 billion.
96. Given the following information, what are the values of M1 and M2?
Small time deposits
$2,200 billion
Demand deposits and other checkable deposits
$1,700 billion
Savings deposits
$2,600 billion
Money market mutual funds
$1,500 billion
Traveler’s checks
$60 billion
Large time deposits
$1,500 billion
Currency
$350 billion
Miscellaneous categories in M2
$75 billion
a.
M1 = $4,310 billion, M2 = $6,285 billion.
b.
M1 = $2,050 billion, M2 = $9,985 billion.
c.
M1 = $2,110 billion, M2 = $8,485 billion.
d.
M1 = $3,610 billion, M2 = $9,985 billion.
97. Given the following information, what are the values of M1 and M2?
Small time deposits
$1,800 billion
Demand deposits and other checkable deposits
$1,000 billion
Savings deposits
$1,400 billion
Money market mutual funds
$1,000 billion
Traveler’s checks
$50 billion
Large time deposits
$600 billion
Currency
$300 billion
Miscellaneous categories in M2
$50 billion
a.
M1 = $3,150 billion, M2 = $6,200 billion.
b.
M1 = $1,350 billion, M2 = $5,600 billion.
c.
M1 = $1,400 billion, M2 = $6,200 billion.
d.
M1 = $1,300 billion, M2 = $5,600 billion.
98. One surprising thing about the U.S. money stock is that
a.
banks hold so much currency relative to the public.
b.
the public holds so much currency relative to banks.
c.
there is so little currency per person.
d.
there is so much currency per person.
99. The amount of currency per person in the United States is about
a.
$110.
b.
$300.
c.
$2,450.
d.
$4,490.
100. In the U.S., the average adult holds about $4,490 in
a.
currency.
b.
wealth.
c.
M1.
d.
M2.
101. Which of the following might explain why the United States has so much currency per person?
a.
U.S. citizens are holding a lot of foreign currency.
b.
Currency may be a preferable store of wealth for criminals.
c.
People use credit and debit cards more frequently.
d.
All of the above help explain the abundance of currency.
102. In the United States, currency holdings per person average about
a.
$110; one explanation for this relatively small average is that many people use credit and debit cards to make
transactions.
b.
$110; one explanation for this relatively small average is that U.S. citizens hold a lot of foreign currency.
c.
$4,490; one explanation for this relatively large amount is that criminals probably prefer currency as a medium
of exchange.
d.
$4,490; one explanation for this relatively large average is that U.S. citizens hold a lot of foreign currency.
103. Which of the following is NOT required for paper dollars to work as a medium of exchange?
a.
An established and regulated system of fiat money
b.
Intrinsic value backed by gold
c.
Government prosecution of counterfeiters
d.
Acceptance as part of social convention
104. When prices rise,
a.
real estate is a better unit of account than money.
b.
money is a worse medium of exchange than real estate.
c.
money is a better store of value than real estate.
d.
real estate is a better store of value than money.
105. Credit cards
a.
are a method of deferring payment, and people who have credit cards hold less money on average.
b.
are a method of deferring payment, and people who have credit cards hold more money on average.
c.
are a medium of exchange, and people who have credit cards hold less money on average.
d.
are a medium of exchange, and people who have credit cards hold more money on average.
106. Which of the following is an example of commodity money?
a.
Rare baseball cards
b.
Euros
c.
Stocks
d.
The gold standard
107. The money stock in the economy is
a.
the amount of wealth accumulating in the economy, such as currency and demand deposits.
b.
the amount of wealth accumulating in the economy, such as money market mutual funds and stocks.
c.
the quantity of money circulating in the economy, such as currency and demand deposits.
d.
the quantity of money circulating in the economy, such as money market mutual funds and stocks.