Chapter 16 Money and the Banking System

| November 9, 2018

1)
The supply of money in the U.S. economy is determined primarily by
A)
decisions made by the Federal Reserve and the U.S. Treasury.
B)
the actions of the Federal Reserve and the banking system.
C)
consumers and the banking system.
D)
the demand for money in the economy.

2)
In the ________ increases in the supply of money will ________.
A)
short run; raise total demand and output
B)
long run; raise total demand and output
C)
long run; lead to lower prices
D)
short run; decrease total demand and output

3)
Money is
A)
anything that is regularly used and generally accepted in economic transactions
or exchanges.
B)
necessary to conduct economic transactions.
C)
facilitates specialization in production.
D)
anything the government declares to have value.

4)
Which of the following can be used as money?
A)
checks
B)
cigarettes
C)
precious stones
D)
all of the above

5)
When money is accepted as payment for a good or service, it is being used as a
A)
medium of exchange.
B)
store of value.
C)
unit of account.
D)
a mechanism for transforming current purchases into future purchases.

6)
Money solves the dilemma of a double coincidence of wants by serving as a
A)
medium of exchange.
B)
store of value.
C)
symbol of value.
D)
unit of account.

7)
When money is used to express the value of goods and services, it is
functioning as a
A)
medium of exchange.
B)
store of value.
C)
unit of account.
D)
store of purchasing power.

8)
If the prices of goods and services were expressed in terms of carved wooden
beads, then the carved wooden beads would be serving as a
A)
medium of exchange.
B)
store of value.
C)
unit of account.
D)
mechanism for transforming present purchases into future purchases.

9)
If money is used as a mechanism to hold purchasing power for a period of time
it is functioning as a
A)
standard of value.
B)
store of value.
C)
medium of exchange.
D)
unit of account.

10)
As inflation rates increase, money becomes less useful as a
A)
unit of account.
B)
store of value.
C)
medium of exchange.
D)
double coincidence of wants.

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