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Chapter 14 - Money, Banking, and Financial Institutions
1. The functions of money are to serve as a:
2. When a consumer wants to compare the price of one product with another, money is
primarily functioning as a:
Chapter 14 - Money, Banking, and Financial Institutions
3. When a banker records how many dollars each of his borrowers owes the bank, money is
serving as a:
4. What function is money serving when you deposit money in a savings account?
5. What function is money serving when you use it when you go shopping?
Chapter 14 - Money, Banking, and Financial Institutions
6. Which of the following functions of money enables society to gain the benefits of
geographic and labor specialization?
7. If product prices were stated in terms of tobacco leaves, then tobacco leaves would be
functioning primarily as:
8. Money functions as a store of value if it allows you to:
Chapter 14 - Money, Banking, and Financial Institutions
9. One major advantage of money serving as a medium of exchange is that it allows society
to:
10. Money eliminates the need for a coincidence of wants in trading primarily through its role
as a:
11. An asset's liquidity refers to its ability to be:
Chapter 14 - Money, Banking, and Financial Institutions
12. Which one of the following is considered to be a stock rather than a flow?
13. The currency or money of the United States, like those of other countries, is:
14. Paper money or currency in the U.S. is essentially:
Chapter 14 - Money, Banking, and Financial Institutions
15. Checkable deposits are:
16. Currency and checkable deposits are:
17. The paper currencies of the U.S. are also called:
Chapter 14 - Money, Banking, and Financial Institutions
18. As of January 2010, slightly more than half of the money supply (M1) was in the form of:
19. Which of the following institutions does not provide checkable-deposit services to the
general public?
20. The M1 money supply is composed of:
Chapter 14 - Money, Banking, and Financial Institutions
21. Which definition(s) of the money supply include(s) only items which are directly and
immediately usable as a medium of exchange?
22. Money supply M1 does not include the currency held by:
23. Joe Rogers deposits $200 in currency in his checking account at a bank. This deposit is
treated as:
Chapter 14 - Money, Banking, and Financial Institutions
24. Which of the following would be considered to be the most liquid?
25. Which of the following items are included in money supply M2 but not M1?
26. Checkable deposits are included in:
Chapter 14 - Money, Banking, and Financial Institutions
27. Refer to the above table. The size of the M1 money supply is:
28. Refer to the above table. The size of the M2 money supply is:
Chapter 14 - Money, Banking, and Financial Institutions
29. Refer to the above table. The value of the money included in M2 but not counted in M1 is:
Use the following list to answer the question about the money supply Items.
1. Money market mutual funds held by individuals
2. Savings deposits, including money market deposit accounts
3. Money market mutual funds held by businesses
4. Currency held by the public
5. Small time deposits
6. Checkable deposits
30. Refer to the list above. The M1 money supply is composed of items:
Chapter 14 - Money, Banking, and Financial Institutions
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31. Refer to the above table. The M2 money supply is composed of items:
32. Refer to the above table. Which items are included in the M2 money supply, but not the M1
money supply?
Use the following table to answer the question about the money supply given the following
hypothetical data for an economy.
Chapter 14 - Money, Banking, and Financial Institutions
33. Refer to the above table. The size of the M1 money supply is:
34. Refer to the above table. The size of the M2 money supply is:
35. The so-called near-monies have the following characteristics, except:
Chapter 14 - Money, Banking, and Financial Institutions
36. People can generally get the following items at their commercial banks, except:
37. Michelle transfers $4,000 from her savings account to her checking account. What effect
is this change likely to have on M1 and M2?
38. Generally speaking, the greater the amount of assets people hold in the form of near-
monies, the:
Chapter 14 - Money, Banking, and Financial Institutions
39. One reason that "near-monies" are important is because:
40. Which of the following "backs" the value of money in the United States?
41. United States currency has value primarily because it:
Chapter 14 - Money, Banking, and Financial Institutions
42. The Federal backing for money in the United States comes from:
43. What "backs" the money supply of the U.S.?
44. Money in the U.S. are essentially debts of:
Chapter 14 - Money, Banking, and Financial Institutions
45. The basic requirement of money is that it be:
46. Checkable deposits are money because they are:
47. When paper money is designated as legal tender, it means that:
Chapter 14 - Money, Banking, and Financial Institutions
48. When there is inflation in the economy, it implies that the:
49. If the price index rises from 100 to 130, then the purchasing power of the dollar will fall
by about:
50. A 15 percent increase in the price level:
Chapter 14 - Money, Banking, and Financial Institutions
51. If the value of the dollar is falling, then it follows that:
52. The consumer price index was 100 in one year and 330 ten years later. The purchasing
power of the dollar over those ten years fell by:
53. The purchasing power of the dollar would fall by 20% if the price index rises by:
Chapter 14 - Money, Banking, and Financial Institutions
54. An inflation rate of 8% would erode the purchasing power of the dollar by:
55. To keep high inflation from eroding the value of money, monetary authorities in the
United States:
56. The Federal Reserve Banks are owned by the:
