Chapter 16 Money and the Banking System

| November 9, 2018

31)
Money market mutual funds are included in
A)
M1.
B)
M2.
C)
both M1 and M2.
D)
neither M1 nor M2.

32)
Which of the following is NOT included in M1 or M2?
A)
checking account balances
B)
currency in circulation outside of commercial banks
C)
traveler’s checks
D)
credit card balances

33)
Which of the following is included in M2?
A)
commercial paper
B)
U.S. Treasury bonds
C)
savings accounts
D)
stocks

34)
Which of the following appears in M2 and NOT M1?
A)
currency
B)
checking account balances
C)
money market mutual funds
D)
traveler’s checks

Currency held
by the public

$450 billion

Demand
deposits

220 billion

Other
checkable deposits

170 billion

Traveler’s
checks

2 billion

Savings
deposits

800 billion

Small
time deposits

50 billion

Money
market mutual funds

170 billion

Table
16.1

35)
According to the information in Table 16.1, M1 is equal to
A)
$620 billion.
B)
$672 billion.
C)
$842 billion.
D)
$1,012 billion.

36)
According to the information in Table 16.1, M2 is equal to
A)
$840 billion.
B)
$1,062 billion.
C)
$1,692 billion.
D)
$1,862 billion.

37)
Economists use different definitions of money because
A)
there are differences in the frequency with which depositors use their
accounts.
B)
deposits can be domestic or international.
C)
deposits may be held at banks or savings and loans.
D)
it is not always clear which assets are used primarily as money.

38)
A reason that economists keep an eye on both M2 and M1 is because
A)
M2 is more accurate than M1.
B)
both fluctuate widely and frequently in total dollar value.
C)
money market accounts are sometimes used like checking accounts and sometimes
like savings accounts.
D)
during a recession, M1 is meaningless.

39)
In the United States economy, what is the basic measure of money?
A)
wealth
B)
M1
C)
disposable income
D)
commodities

40)
Along with currency not in banks and deposits in checking accounts, what is
another component of the M1 measure of money?
A)
credit cards
B)
debit cards
C)
traveler’s checks
D)
prepaid accounts

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