Chapter 32 MacroEco – Flashcards
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What is not part of the M2 money supply?
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large-denominated time deposits
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(Last Word) After years of aiding drug cartels, mobsters, and terrorist groups laundering money, HSBC bank was:
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fined about five weeks' worth of profits
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In the financial industry, "securitization" refers to:
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bundling groups of loans, bonds, mortgages, and other financial debts into new securities.
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The assets that are not included in either M1 or M2 are:
1. Large-denominated ($100,000 and over) time deposits
2. Noncheckable savings deposits
3. Currency (coins and paper money) in circulation
4. Small-denominated (under $100,000) time deposits
5. Stock certificates
6. Checkable deposits
7. Money market deposit accounts
8. Money market mutual fund balances held by individuals
9. Money market mutual fund balances held by businesses
10. Currency held in bank vaults
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items 1. 5, 9, and 10
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Approximately how many commercial banks are now operating in the United states?
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about 6,000
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Firms whose central business is to offer security advice and buy and sell individual stocks and bonds for clients are known as:
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securities firms
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If you place a part of your summer earnings in a savings account, you are using money primarily as a:
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store of value
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Checkable deposits are classified as money because:
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they can be readily used in purchasing goods and paying debts
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The various lender-of-last-resort programs implemented by the Fed in response to the financial crisis of 2007 and 2008:
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increased the moral hazard problem by limiting losses from bad financial decisions
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If you are estimating your total expenses for school next semester, you are using money primarily as:
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a unit of account
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During periods of rapid inflation, money may cease to work as a medium of exchange:
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because people and businesses will not want to accept it in transactions
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Coins held in commercial banks are:
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not part of the nation's money supply
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Suppose that the federal government suddenly declared that wheat was to be used as money. What is a possible outcome of that decision?
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-The value of the "wheat dollar" would be unstable depending on crop yields from year to year.
-Farmers would replace corn and soy crops with wheat.
-Wheat would function as money so long as people accept it in exchange for goods and services.
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The M2 definition of money compromises:
1. Large-denominated ($100,000 and over) time deposits
2. Noncheckable savings deposits
3. Currency (coins and paper money) in circulation
4. Small-denominated (under $100,000) time deposits
5. Stock certificates
6. Checkable deposits
7. Money market deposit accounts
8. Money market mutual fund balances held by individuals
9. Money market mutual fund balances held by businesses
10. Currency held in bank vaults
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Items 2, 3, 4, 6, 7, and 8
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To say that coins are "token money" means that:
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their face value is greater than their intrinsic value
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A $70 price tag on a sweater in a department store window is an example of money functioning as a:
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unit of account
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The value of money varies:
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inversely with the price level
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A checking account entry is money bc it
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performs the functions of money
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Near-monies:
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are certain highly liquid financial assets that do NOT function directly as a medium of exchange
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The money supply is backed:
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by the government's ability to control the supply of money and therefore to keep its value relatively stable
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Which of the following statements is true about the high rate of mortgage defaults that contributed to the financial crisis of 2007 and 2008?
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Prior to the rise in defaults, banks had become lax in their lending practices, resulting in a large number of bad loans.
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Purchasing common stock by writing a check best exemplifies money serving as a:
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medium of exchange
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Some economists are concerned that the financial rescue provided by the TARP will encourage financial investors and firms to take on greater risks in the future. This is an example of:
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moral hazard
