question

paper money fully backed by a precious metal and issued by the government is called

answer

representative full-bodied money

question

fiat money is

answer

legal tender proclaimed to be money by the law

question

with a mint ratio of 15 oz of silver to 1 oz of gold, and and a market ratio of 15.5 oz of silver to 1 oz of gold

answer

gold coins should go out of circulation

question

the u.s. bimetallic standard was based on

answer

silver and gold

question

which of the following would not be considered liquid

answer

all of the above are liquid (money in savings account, coins, currency)

question

when it is a means of paying for goods and services and discharging debts, money is referred to as a

answer

medium of exchange

question

which of the following statements are correct

answer

debit cards provide for the immediate direct transfer of deposit accounts

question

under the Bretton Woods agreement, a fixed exchange rate system tied to gold and the U.S. dollar dominated international trading during

answer

1944-1971

question

the only paper money of significance int he economy today is

answer

federal reseve notes

question

token couns are

answer

coins containing metal of less value than their stated value

question

which of the following describes the basic function f money

answer

medium of exchange

question

the M1 definition of the money supply includes which of the following items

answer

all of the above (currency, demand deposits and other checkable deposits at depository institutions, and travelers' checks)

question

which of the following statements is false

answer

the bretton wood system of fixed exchange rates was maintained until 1975

question

which of the following are not included in m1?

answer

money market deposit accounts (in m2)

question

money market mutual funds do which of the following

answer

all of the above (issue shares to customers, invest in liquid instruments, invest in interest-bearing debt instruments)

question

which of the following statements is most correct

answer

both gold and silver have now been completely removed from any monetary role in the U.S. economy

question

which of the following statements is false

answer

money can always function as a store of purchasing power, even if its value is relatively unstable

question

any circulating money which has little real value relative to its monetary value is called

answer

credit money

question

inflation is

answer

an increase in the prices of goods and srvices not offset by increasing in the quality of those goods and services

question

the function of money that expresses prices and contracts for deferred payments in terms of the monetary unit is referred to as

answer

standard of value

question

increased credit card usage

answer

may expand money supply

question

the supply of a currency in international markets depends largely on the

answer

imports of the issuing country

question

the advantages claimed for a bimetallic standard were not gained in actual practice because

answer

one of the metals disappeared from circulation because the mint and market ratios were not the same

question

barter involves ethe exchange of

answer

goods and services

question

when couns have an intrinsic value equal to the value of the metal they contain, they are refferred to as

answer

full-bodied money

question

which of the following are not depository institutions

answer

the federal reserve

question

\"continentals\" were backed by

answer

possible future tax revenues

question

Today's Federal Reserve notes are

answer

fiat money

question

credit money is backed by

answer

creditworthiness of the issuer

question

deposit money is backed by

answer

creditworthiness of the depository institution

question

the savings-investment process

answer

involves the transfer in individual savings to the Federal Government

question

all money should perform the following functions except

answer

guarantee of validity

question

the velocity of money measures

answer

the rate of circulation of the money supply

question

three of the functions of money are

answer

medium of exchange, store of value, and standard of value

question

an increase in the general overall prices of goods and services that is not offset by increases in the quality of those goods and services is the definition for

answer

inflation

question

functions of money include all of the following except

answer

money determines the wealth of a nation

question

a monetary standard based on two metals, usually silver and gold is called

answer

a bimetallic standard

question

paper money backed by a precious metal is caled

answer

representative full-bodied money

question

legal tender proclaimed to be money by law is called

answer

fiat money

question

a measure of the output of goods and services in an economy is called

answer

gross domestic product

question

if the money supply for an economy is $3 trillion and the velocity of money is 4.5, then GDP is

answer

$13.5 trillion 4.5($3 trillion)

question

if the money supply for an economy is $3 trillion and the GDP is $10 trillion, then the velocity of the money is

answer

3.33 $10 trillion/$3 trillion

question

a rise in prices not offset by increases in quality

answer

inflation

question

major factor in the severity of the 2007-09 financial crisis was the massive amounts of debt taken on by

answer

all of the above (individuals, businesses, financial institutions)

question

historically speaking, _____ taken as a group has/have generally been a surplus economic unit in the past

answer

individuals

question

_____ include the direct ownership of land, building or homes, equipment, inventories, durable goods, and even precious metals

answer

real assets

question

_____ include money, debt instruments, equity securities, and other financial contracts that are backed by real assets and the earning abilities of issuers

answer

financial assets

question

_____ accounts are increasingly used to make direct deposits to, and payments from, checkable deposit accounts

answer

automatic transfer service (ATS)

question

_____ are debt instruments or securities with maturities of one year or less and have low default risk and high liquidity

answer

money market securities

question

A ____ is a short-term debt instrument issued by commercial banks in denominations of $100,000 or more with typiccal maturities ranging from one month to one year that have an active secondary market that allows short-term investors to easily match their cash or liquidity needs when they arise

answer

negotiable certificate of deposit (NCD)

question

short-term unsecured promissory note isued by a high credit-quality corporation with maturities of one to three months in length with an active secondary money

answer

commercial paper

question

_____ is a promise of future payment issued by a rfirm and guaranteed by a bank that is used tofinance international trade with typical maturities ranging from one to six months

answer

a banker's acceptance

question

short-term debt security sold by a business firm or financial institution to another business or institution where the seller agrees to buy back the security at a specified price and date

answer

a repurchase agreement

question

____ are very short-term loans, usually with maturities of one day to one week made between depository institutions

answer

federal funds

question

the velocity of money measures the rate of circulation of the money supply and can be expressed by the following equaltion

answer

vm=gdp/ms

question

if annual gdp is $100 billion and the MS is $20 billion, the velocity of the money is

answer

5

question

____ belive that when the money supply exceeds the amount of money demanded, the public will spend more rapidly, causing real economic activity or prices to rise

answer

Monetarists

question

____ believe that a change in the money supply first causes a change in interest rate levels, which, in turrn, aters the demand for goods and services

answer

Keynesians

question

a major international development occurred ion january 1, 1999 when 12 european countries gave up their individual currencies and adopted the

answer

euro

question

the price level of goods and services may be expressed as the ratio of

answer

GDP to real output GDP/RO

question

real output in an economy may be expressed as the ratio of

answer

GDP to price level GDP/PL

question

____ issue shares to customers and invest the proceeds in highly liquid, very-short-maturity, interest-bearing debt instruments called money market investments

answer

Money market mutual funds (MMMFs)

question

____ is the sum of an individual's money, real assets, and financial assets or claims against others less the individual's debt obligations

answer

individual net worth

question

the price level of goods and services may be expressed as the ratio of

answer

(MSxVM)/RO

Chapter 2 Practice Problems

Unlock all answers in this set

Haven't found what you were looking for?

Search for samples, answers to your questions and flashcards