25.
Treasury Bonds are
a.
liquid, but not a store of value.
b.
a store of value, but not liquid.
c.
both liquid and a store of value.
d.
neither liquid nor a store of value.
26.
Treasury Bonds are
a.
both a store of value and a medium of exchange.
b.
a store of value, but not a medium of exchange
c.
a medium of exchange, but not a store of value.
d.
neither a store of value nor a medium of exchange.
27.
Which of the following is both a store of value and regularly used as a medium of exchange?
a.
cash and stocks
b.
cash but not stocks
c.
stocks but not cash
d.
neither cash nor stocks
28.
When we measure and record economic value, we use money as the
a.
liquid asset.
b.
medium of exchange.
c.
unit of account.
d.
store of value.
29.
When in France you notice that prices are posted in euros, this best illustrates money’s function as
a.
a store of value.
b.
a medium of exchange.
c.
a unit of account.
d.
a method of barter.
30.
Which of the following best illustrates the unit of account function of money?
a.
You list prices for candy sold on your Web site, www.sweettooth.com, in dollars.
b.
You pay for your theater tickets with dollars.
c.
You hold currency even though you don’t intend to spend it right away.
d.
None of the above is correct.
31.
The “yardstick” people use to post prices and record debts is called
a.
a medium of exchange.
b.
a unit of account.
c.
a store of value.
d.
liquidity.
32.
You saved $500 in currency in your piggy bank to purchase a new laptop. The $500 you kept in
your piggy bank
illustrates money’s function as a . The laptop’s price is posted as $500. The
$500 price illustrates money’s
function as a . You use the $500 to purchase the laptop. This
transaction illustrates money’s function as a
______.
a.
store of value, medium of exchange, unit of account
b.
store of value, unit of account, medium of exchange
c.
medium of exchange, unit of account, store of value
d.
medium of exchange, store of value, unit of account
33.
Imagine an economy in which: (1) pieces of paper called dollars are the only thing that buyers
give to sellers when
they buy goods and services, so it would be common to use, say, 50 dollars to
buy a pair of shoes; (2) prices are
posted in terms of yardsticks, so you might walk into a grocery
store and see that, today, an apple is worth 2
yardsticks; and (3) yardsticks disintegrate overnight,
so no yardstick has any value for more than 24 hours. In this
economy,
a.
the yardstick is a medium of exchange but it cannot serve as a unit of account.
b.
the yardstick is a unit of account but it cannot serve as a store of value.
c.
the yardstick is a medium of exchange but it cannot serve as a store of value, and the yollar is a
unit of
account.
d.
the yollar is a unit of account, but it is not a medium of exchange and it is not a liquid asset.
34.
Commodity money is
a.
backed by gold.
b.
the principal type of money in use today.
c.
money with intrinsic value.
d.
receipts created in international trade that are used as a medium of exchange.
35.
Prisoners sometimes determine a single good to be used as money. This good becomes
a.
a medium of exchange and a unit of account.
b.
a medium of exchange, but not a unit of account.
c.
a unit of account, but not a medium of exchange.
d.
neither a unit of account nor a medium of exchange.
36.
When colonists in Virginia used tobacco as money, their money
a.
was commodity money.
b.
had no intrinsic value.
c.
was fiat money.
d.
had no store of value.
37.
If an economy uses silver as money, then that economy’s money
a.
serves as a store of value but not as a medium of exchange.
b.
serves as a medium of exchange but not as a unit of account.
c.
is commodity money.
d.
has no intrinsic value.
38.
Many societies used gold as money, because
a.
it is relatively rare.
b.
it is durable.
c.
it has a relatively low melting point.
d.
All of the above are correct.
39.
According to the article “Why Gold?’, silver may be used as money. One problem with using
silver as money is that
a.
silver is too abundant.
b.
silver tarnishes over time.
c.
it is not a precious metal.
d.
it has a high melting point.
40.
Fiat money
a.
has no intrinsic value.
b.
is backed by gold.
c.
is a medium of exchange but not a unit of account.
d.
is any close substitute for currency such as checkable deposits.
41.
Fiat money
a.
is worthless.
b.
has no intrinsic value.
c.
may be used as a medium of exchange, but is not legal tender.
d.
refers to highly liquid assets that do not serve as a medium of exchange.
42.
Currently, U.S. currency is
a.
fiat money with intrinsic value.
b.
fiat money with no intrinsic value.
c.
commodity money with intrinsic value.
d.
commodity money with no intrinsic value.
43.
All U.S. paper dollars read “This note is legal tender for all debts, public and private.” This
statement represents which characteristic of US currency?
a.
The U.S. operates under the gold standard.
b.
U.S. paper money is commodity money.
c.
U.S. paper money is fiat money.
d.
U.S. paper money is a convenient store of wealth.
44.
The legal tender requirement means that
a.
people are more likely to accept the dollar as a medium of exchange.
b.
the government must hold enough gold to redeem all currency.
c.
people may not make trades with anything else.
d.
All of the above are correct.
45.
The Soviet government in the 1980’s never abandoned the ruble as the official currency.
However, the people of
Moscow preferred to accept
a.
cigarettes in exchange for goods and services, because they were convinced that cigarettes
were going to
soon become hard to come by.
b.
American dollars in exchange for goods and services, because rubles were extremely hard to
come by.
c.
goods such as cigarettes or American dollars in exchange for goods and services, reminding us
of the fact
that government decree by itself is not sufficient for the success of a commodity
money.
d.
All of the above are correct.
46.
The primary difference between commodity money and fiat money is that
a.
commodity money is a medium of exchange but fiat money is not.
b.
fiat money is a medium of exchange but commodity money is not.
c.
commodity money has intrinsic value but fiat money does not.
d.
fiat money has intrinsic value but commodity money does not.
47.
Which type of money has intrinsic value?
a.
commodity money
b.
fiat money
c.
both commodity money and fiat money
d.
neither commodity money nor fiat money
48.
If an economy used gold as money, its money would be
a.
commodity money, but not fiat money.
b.
fiat money, but not commodity money.
c.
both fiat and commodity money.
d.
functioning as a store of value and as a unit of account, but not as a medium of exchange.
49.
When prisoners use cigarettes or some other good as money, cigarettes become
a.
commodity money, but do not function as a unit of account.
b.
commodity money and function as a unit of account.
c.
fiat money, but do not function as a unit of account.
d.
fiat money and function as a unit of account.
50.
Paper money
a.
has a high intrinsic value.
b.
is the primary medium of exchange in a barter economy.
c.
is valuable because it is generally accepted in trade.
d.
is valuable only because of the legal tender requirement.
51.
Paper dollars
a.
are commodity money and gold coins are fiat money.
b.
are fiat money and gold coins are commodity money.
c.
and gold coins are both commodity monies.
d.
and gold coins are both fiat monies.
52.
For purposes of analyzing the money stock and its relationship to relevant economic variables,
money is best
thought of as
a.
those items that can be readily accessed and used to buy goods and services.
b.
currency only.
c.
currency plus all bank accounts.
d.
currency plus all bank accounts plus bonds.
53.
Currency includes
a.
paper bills and coins.
b.
demand deposits.
c.
credit cards.
d.
Both (a) and (b) are correct.
54.
The set of items that serve as media of exchange clearly includes
a.
balances that lie behind debit cards.
b.
demand deposits.
c.
other checkable deposits.
d.
All of the above are correct.
55.
The set of items that serve as media of exchange clearly includes
a.
demand deposits.
b.
short-term bonds.
c.
credit cards.
d.
All of the above are correct.
56.
Demand deposits are a type of
a.
checking account.
b.
time deposit.
c.
money market mutual fund.
d.
savings deposit.
57.
People can write checks against
a.
demand deposits and money market mutual funds
b.
demand deposits but not money market mutual funds
c.
money market mutual funds but not demand deposits
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