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Chapter 3What Is Money?

Multiple Choice

)1 There is no single precise measure of money or the money supply for economists because

()a the government considers money supply statistics to be confidential and refuses to publish them.

()b deciding what is generally accepted in payment for goods and services or in the repayment of

debt is difficult to determine.

()c economists cannot agree if currency should be considered money.

()d of each of the above.

()e of both (a) and (b) of the above.

Answer:

Question Status: revious !dition

)" !conomists find no completely satisfactory way to measure money because

()f money supply statistics are a state secret.

()g the #ederal $eserve does not employ or report different measures of the money supply.

()h the %moneyness& or li'uidity of an asset is a matter of degree.

()i economists find disagreement interesting and refuse to agree for ideological reasons.

Answer:


) urrency includes

()* paper money and coins.

()+ paper money, coins, and chec+s.

()l paper money and chec+s.

()m paper money, coins, chec+s, and savings deposits.

Answer:




- #rederic S. /ish+in 0 Economics of Money, Banking, and Financial Markets, Seventh !dition

) The difference between money and income is that

()n money is a flow and income is a stoc+.

()o money is a stoc+ and income is a flow.

()p there is no difference2money and income are both stoc+s.

()' there is no difference2money and income are both flows.

Answer:


)- 3t is true that

()r income and wealth are both stoc+s.

()s money and income are both stoc+s.

()t income is a flow and wealth is a stoc+.

()u money and wealth are both flows.

()v money and income are both flows.

Answer:

Question Status: 4ew

)5 6hen people say, %7ill 8ates sure is rich, he has a lot of money,& they probably mean that7ill 8ates

()w has a large chec+ing account balance.

()9 is 'uite wealthy.

()y has a relatively high income.

() all of the above.

()aaonly (a) and (b) of the above.

Answer:


); An individual<s annual salary is her

()bb money.

()ccincome.

()dd wealth.

()eeliabilities.

()ff assets.

Answer:


)= A person<s house is part of her

()gg money.

()hh income.

()ii liabilities.

()** wealth.

()++ all of the above.

Answer:




hapter 6hat 3s /oney> 5?

) A person<s chec+ing deposits are part of her

()ll money.

()mm income.

()nn wealth.

()oo all of the above.

()pp only (a) and (c) of the above.

Answer:


)1? A penny collection is

()'' money.

()rr income.

()sswealth.

()tt all of the above.

()uu only (a) and (c) of the above.

Answer:


)11 /oney is

()vv anything that is generally accepted in payment for goods and services or in the repayment ofdebt.

()ww fre'uently2but incorrectly2used synonymously with wealth.

()99 paper money, coins, and chec+s.

()yy all of the above.

()only (a) and (c) of the above.

Answer:

Question Status: $evised

)1" /oney is

()aaa anything that is generally accepted in payment for goods and services or in the repayment of

debt.

()bbb fre'uently2but incorrectly2used synonymously with wealth.

()ccc a flow of earnings per unit of time.

()ddd all of the above.

()eee only (a) and (b) of the above.

Answer:


)1 6hich of the following are true statements>

()fff 6ealth is the total collection of pieces of property that are a store of value.

()ggg /oney is fre'uently confused with income.

()hhh 3ncome is a flow of earnings per unit of time.

()iiiAll of the above are true.

()***@nly (a) and (b) of the above are true.

Answer:




hapter 6hat 3s /oney> 5"

)1 6hen an economist states that barter is impossible, she doesn<t really mean that barter is impossible.

Ber real meaning is that

()gggg barter transactions are relatively costly.

()hhhh barter has no useful place in today<s world.

()iiii it is impossible for barter transactions to leave parties to an e9change better off.

()**** barter is illegal.

()++++ each of the above is true.

Answer:

Question Status: Study 8uide

)"? A problem with barter e9change is that barter re'uires

()llll a double coincidence of wants.

()mmmm specialiation.

()nnnn standardiation.

()oooo mutual respect.

()pppp a common denominator to determine prices.

Answer:


)"1 The problem of the double coincidence of wants can be avoided if

()'''' trade is organied in a central mar+et.

()rrrr money is used to facilitate e9changes.

()ssss barter trades are encouraged.

()tttt both (a) and (b) of the above.

Answer:


)"" The conversion of a barter economy to one that uses money increases efficiency by reducing

()uuuu the need to e9change goods.

()vvvv the need to specialie.

()wwww the need to employ team production methods.

()9999 transactions costs.

Answer:


)" The conversion of a barter economy to one that uses money

()yyyy increases efficiency by reducing the need to e9change goods and services.

() increases efficiency by reducing the need to specialie.

()aaaaa increases efficiency by reducing transactions costs.

()bbbbbdoes not increase economic efficiency.

Answer:




5 #rederic S. /ish+in 0 Economics of Money, Banking, and Financial Markets, Seventh !dition

)" 6hich of the following are true statements>

()ccccc The conversion of a barter economy to one that uses money increases efficiency by reducingthe cost of e9change.

()dddddThe conversion of a barter economy to one that uses money increases efficiency by reducing

the cost to those who wish to specialie.

()eeeee The conversion of a barter economy to one that uses money increases efficiency by reducing

transactions costs.()fffff All of the above are true.

()ggggg@nly (a) and (c) of the above are true.

Answer:


)"- 6hich of the following are true statements>

()hhhhhThe conversion of a barter economy to one that uses money increases efficiency by

increasing the cost of e9change.

()iiiii The conversion of a barter economy to one that uses money increases efficiency by

increasing the cost to those who wish to specialie.

()***** The conversion of a barter economy to one that uses money increases efficiency by reducingtransactions costs.

()+++++All of the above are true.

Answer:


)"5 6hich of the following are true statements>

()lllll The conversion of a barter economy to one that uses money increases efficiency by

increasing the cost of e9change.

()mmmmm The conversion of a barter economy to one that uses money increases efficiency

by reducing the cost to those who wish to specialie.

()nnnnnThe conversion of a barter economy to one that uses money does not increase economicefficiency.

()oooooAll of the above are true.

Answer:


)"; 6hen compared to e9change systems that rely on money, disadvantages of the barter system

include:

()pppppthe re'uirement of a double coincidence of wants.

()'''''increasing the cost of e9changing goods over time.

()rrrrr raising the cost of e9change to those who would specialie.

()sssss all of the above.

Answer:




hapter 6hat 3s /oney> 5

)"= 6hen compared to e9change systems that rely on money, disadvantages of the barter system

include:

()ttttt the re'uirement of a double coincidence of wants.

()uuuuulowering the cost of e9changing goods over time.

()vvvvvlowering the cost of e9change to those who would specialie.

()wwwww all of the above.

Answer:


)" 7ecause it is a medium of e9change, money

()99999eliminates the re'uirement for a double coincidence of wants.

()yyyyyencourages specialiation.

() reduces transaction costs.

()aaaaaa does all of the above.

()bbbbbb does only (a) and (b) of the above.

Answer:


)? 7ecause it is a medium of e9change, money

()cccccc encourages specialiation and the division of labor.

()dddddd reduces transaction costs.

()eeeeee is not allowed to earn interest.

()ffffff does all of the above.

()gggggg does only (a) and (b) of the above.

Answer:


)1 7ecause it is a medium of e9change, money

()hhhhhh discourages specialiation and the division of labor.

()iiiiii reduces transaction costs.

()****** is not allowed to earn interest.

()++++++ does only (b) and (c) of the above.

Answer:


)" 7ecause it is a medium of e9change, money

()llllll does not earn interest.

()mmmmmm eliminates the re'uirement for a double coincidence of wants.

()nnnnnn must be currency.

()oooooo cannot be a durable asset.

Answer:




hapter 6hat 3s /oney> 55

)= #or a commodity to function effectively as money it must be

()lllllll easily standardied, ma+ing it easy to ascertain its value.

()mmmmmmm widely accepted.

()nnnnnnn deteriorate 'uic+ly so that its supply does not become to large.

()ooooooo all of the above.

()ppppppp only (a) and (b) of the above.

Answer:


) 3f it is generally acceptable as a medium of e9change then it

()''''''' must be a commodity.

()rrrrrrr must be a precious metal such as gold or silver.

()sssssss is money.

()ttttttt all of the above.

Answer:


)? All but the most primitive societies use money as a medium of e9change, implying that

()uuuuuuu the use of money is economically efficient.

()vvvvvvv barter e9change is economically inefficient.

()wwwwwww barter e9change cannot wor+ outside the family.

()9999999 all of the above.

()yyyyyyy only (a) and (b) of the above.

Answer:


)1 6hatever a society uses as money, the distinguishing characteristic is that

() it must be completely inflation proof.

()aaaaaaaa it must be generally acceptable as payment for goods and services or in therepayment of debt.

()bbbbbbbb it must contain gold.

()cccccccc it must be produced by the government.

Answer:


)" Although it can have a number of characteristics and serves more than one role, money must

()dddddddd be bac+ed in gold.

()eeeeeeee have a nonmonetary value.

()ffffffff be generally acceptable.

()gggggggg be ine9pensive to produce.

Answer:




5; #rederic S. /ish+in 0 Economics of Money, Banking, and Financial Markets, Seventh !dition

) Although it can have a number of characteristics and serves more than one role, money must

()hhhhhhhh be ine9pensive to produce.

()iiiiiiii be generally acceptable.

()******** have a nonmonetary value.

()++++++++ be both (a) and (b) of the above.

()llllllll be both (a) and (c) of the above.

Answer:


) The resources used finding buyers or sellers and negotiating price and other terms are called

()mmmmmmmm pecuniary costs.

()nnnnnnnn barter costs.

()oooooooo transactions costs.

()pppppppp information costs.

()'''''''' enforcement costs.

Answer:


)- Although money facilitates e9change, e9change is still costly. The costs of e9change are called

()rrrrrrrr mediumCofCe9change costs.

()ssssssss transaction costs.

()tttttttt li'uidity costs.

()uuuuuuuu barter costs.

Answer:


)5 The time and resources spent trying to e9change goods and services are called

()vvvvvvvv bargaining costs.

()wwwwwwww transaction costs.

()99999999 contracting costs.

()yyyyyyyy barter costs.

Answer:


); !conomists say that money is productive because it reduces

() mediumCofCe9change costs.

()aaaaaaaaa transaction costs.

()bbbbbbbbb li'uidity costs.

()ccccccccc barter costs.

Answer:




hapter 6hat 3s /oney> 5=

)= ompared to an economy that uses a medium of e9change, in a barter economy

()ddddddddd transaction costs are higher.

()eeeeeeeee transaction costs are lower.

()fffffffff li'uidity costs are higher.

()ggggggggg li'uidity costs are lower.

Answer:


) /oney reduces transactions costs, allowing people to specialie in what they do best. /oney,

therefore, promotes

()hhhhhhhhh greed and avarice.

()iiiiiiiiiefficiency.

()*********the division of labor.

()+++++++++ only (a) and (b) of the above.

()lllllllllonly (b) and (c) of the above.

Answer:


)-? /oney reduces transaction costs, allowing people to specialie in what they do best. /oney,

therefore, promotes

()mmmmmmmmm greed and avarice.

()nnnnnnnnn inefficiency.

()ooooooooo the division of labor.

()ppppppppp competition.

Answer:


)-1 7ecause money reduces transaction costs, it

()''''''''' promotes efficiency.()rrrrrrrrr promotes the division of labor.

()sssssssss favors production over e9change.

()tttttttttdoes all of the above.

()uuuuuuuuu does only (a) and (b) of the above.

Answer:


)-" 7ecause money reduces transaction costs, it

()vvvvvvvvv promotes inefficiency by encouraging too many e9changes.

()wwwwwwwwwpromotes the division of labor.

()999999999 favors productive activities over e9change activities.

()yyyyyyyyy does only (b) and (c) of the above.

Answer:Question Status: revious !dition



5 #rederic S. /ish+in 0 Economics of Money, Banking, and Financial Markets, Seventh !dition

)- /oney reduces transaction costs, allowing people to specialie in what they do best. /oney,

therefore,

() encourages greed and avarice.

()aaaaaaaaaa improves economic efficiency.

()bbbbbbbbbb frustrates e9change.

()cccccccccc only (a) and (b) of the above.

()dddddddddd only (b) and (c) of the above.

Answer:


)- /oney reduces transaction costs, allowing people to specialie in what they do best. /oney,

therefore,

()eeeeeeeeee decreases specialiation.

()ffffffffffimproves economic efficiency.

()gggggggggg frustrates e9change.

()hhhhhhhhhh only (a) and (b) of the above.


)-- 7ecause money reduces transaction costs, it

()iiiiiiiiii encourages greed and avarice.

()********** improves economic efficiency.

()++++++++++ encourages specialiation and e9change.

()llllllllll does only (a) and (b) of the above.

()mmmmmmmmmm does only (b) and (c) of the above.


)-5 @ne can be confident that money must promote efficiency because()nnnnnnnnnn almost every society e9cept the most primitive uses it.

()oooooooooo people generally prefer using it in e9changes.

()pppppppppp both (a) and (b) of the above.

()'''''''''' neither (a) nor (b) of the above.

Answer:


)-; 6hen money prices are used to facilitate comparisons of value, money is said to function as a

()rrrrrrrrrrunit of account.

()ssssssssss medium of e9change.

()tttttttttt store of value.

()uuuuuuuuuu paymentsCsystem ruler.




hapter 6hat 3s /oney> ;?

)-= 7ecause it is a unit of account, money

()vvvvvvvvvv reduces transaction costs.

()wwwwwwwwww reduces the number of prices that need to be calculated.

()9999999999 does not earn interest.

()yyyyyyyyyy does all of the above.

() does only (a) and (b) of the above.

Answer:


)- 7ecause it is a unit of account, money

()aaaaaaaaaaa increases transaction costs.

()bbbbbbbbbbb reduces the number of prices that need to be calculated.

()ccccccccccc does not earn interest.

()ddddddddddd does all of the above.

Answer:


)5? A problem with barter e9change when there are many goods is that in a barter system

()eeeeeeeeeee transactions costs are minimied.

()fffffffffff there e9ists a multiple number of prices for each good.

()ggggggggggg everyone is overspecialied.

()hhhhhhhhhhh e9change of services is impossible.

()iiiiiiiiiii there is only one store of value.

Answer:


)51 3n a barter economy the number of prices in an economy with 4 goods is

()*********** D4(4 − 1)E/".

()+++++++++++ 4(4/").

()lllllllllll "4.

()mmmmmmmmmmm 4(4/") − 1.

Answer:


)5" 3f there are five goods in a barter economy, one needs to +now ten prices in order to e9change one

good for another. 3f, however, there are ten goods in a barter economy, then one needs to +now

FFFFF prices in order to e9change one good for another.

()nnnnnnnnnnn "?

()ooooooooooo "-

()ppppppppppp ?

()''''''''''' -

Answer:




;1 #rederic S. /ish+in 0 Economics of Money, Banking, and Financial Markets, Seventh !dition

)5 3f there are three goods in a barter economy, one needs to +now three prices in order to e9change

one good for another. 3f, however, there are ten goods in a barter economy, then one needs to +now


()rrrrrrrrrrr 1?

()sssssssssss 1-

()ttttttttttt ?

()uuuuuuuuuuu -


)5 3f there are five goods in a barter economy, one needs to +now ten prices in order to e9change one

good for another. 3f, however, there are four goods in a barter economy, then one needs to +now


()vvvvvvvvvvv

()wwwwwwwwwww -

()99999999999 5

()yyyyyyyyyyy =


)5- 3f there are four goods in a barter economy, then one needs to +now FFFFF prices in order to

e9change one good for another.

() =

()aaaaaaaaaaaa 5

()bbbbbbbbbbbb -

()cccccccccccc

Answer:


)55 3f there are five goods in a barter economy, one needs to +now ten prices in order to e9change one

good for another. 3f, however, there are si9 goods in a barter economy, then one needs to +now FFFFF prices in order to e9change one good for another.

()dddddddddddd 5

()eeeeeeeeeeee

()ffffffffffff 1"

()gggggggggggg 1-

Answer:


)5; 3f there are three goods in a barter economy, one needs to +now three prices in order to e9change

one good for another. 3f, however, there are si9 goods in a barter economy, then one needs to +now


()hhhhhhhhhhhh 1-

()iiiiiiiiiiii1"

()************

()++++++++++++ 5

Answer:




hapter 6hat 3s /oney> ;"

)5= 3f there are four goods in a barter economy, one needs to +now si9 prices in order to e9change one

good for another. 3f, however, there are five goods in a barter economy, then one needs to +now


()llllllllllll=

()mmmmmmmmmmmm

()nnnnnnnnnnnn 1?

()oooooooooooo 1"


)5 3f there are three goods in a barter economy, one needs to +now three prices in order to e9change

one good for another. 3f, however, there are five goods in a barter economy, then one needs to +now


()pppppppppppp -

()'''''''''''' 5

()rrrrrrrrrrrr =

()ssssssssssss 1?


);? 6hich of the following assets can serve as a store of value>

()tttttttttttt/oney

()uuuuuuuuuuuu Stoc+s and bonds

()vvvvvvvvvvvv Bouses

()wwwwwwwwwwww All of the above

Answer:


);1 7ecause it is a store of value, money()999999999999 does not earn interest.

()yyyyyyyyyyyy cannot be a durable asset.

() must be currency.

()aaaaaaaaaaaaa is none of the above.

Answer: G


);" Although not a uni'ue store of value, people find money a convenient store of value because

()bbbbbbbbbbbbb it does not decline in value when prices rise.

()ccccccccccccc its value remains fi9ed to the price level that is, if prices double so does the value

of money.()ddddddddddddd it is the most li'uid asset.

()eeeeeeeeeeeee of all of the above.

()fffffffffffff of none of the above.

Answer:




; #rederic S. /ish+in 0 Economics of Money, Banking, and Financial Markets, Seventh !dition

); 3ncreasing transactions costs of selling an asset ma+e the asset

()ggggggggggggg more valuable.

()hhhhhhhhhhhhh more li'uid.

()iiiiiiiiiiiii less li'uid.

()************* more moneyli+e.

()+++++++++++++ more fungible.

Answer:


); @f the following assets, the most li'uid is

()lllllllllllll savings bonds.

()mmmmmmmmmmmmm corporate 7onds.

()nnnnnnnnnnnnn stoc+s.

()ooooooooooooo traveler<s chec+s.

()ppppppppppppp certificates of deposit.

Answer:


);- @f the following assets, the least li'uid is

()''''''''''''' currency.

()rrrrrrrrrrrrr traveler<s chec+s.

()sssssssssssss chec+ing deposits.

()ttttttttttttt a house.

()uuuuuuuuuuuuu stoc+s.

Answer:


);5 $an+ing assets from most li'uid to least li'uid, the correct order is

()vvvvvvvvvvvvv savings bonds house currency.

()wwwwwwwwwwwww currency savings bonds house.

()9999999999999 currency house savings bonds.

()yyyyyyyyyyyyy house savings bonds currency.

() house currency savings bonds.

Answer:


);; $an+ing assets from most li'uid to least li'uid, the correct order is

()aaaaaaaaaaaaaa savings deposits corporate bond swimming pool.

()bbbbbbbbbbbbbb swimming pool savings deposits corporate bond.

()cccccccccccccc corporate bond savings deposits swimming pool.

()dddddddddddddd swimming pool corporate bonds savings deposits.

()eeeeeeeeeeeeee savings deposits swimming pool corporate bonds.

Answer:




hapter 6hat 3s /oney> ;

);= Assets such as bonds, common stoc+, art, land, furniture, cars, or houses function as stores of

value, but

()ffffffffffffff are not generally accepted in the payment for goods and services.

()gggggggggggggg do not generate flows of income for their owners.

()hhhhhhhhhhhhhh are not considered as wealth.

()iiiiiiiiiiiiii all of the above.

()************** only (a) and (b) of the above.

Answer:


); hec+able deposits are money because

()++++++++++++++ federal regulations mandate that they be so considered.

()llllllllllllll they serve the functions of money.

()mmmmmmmmmmmmmm only ban+s, and not savings and loan associations, can issue

chec+able deposits.

()nnnnnnnnnnnnnn of both (a) and (b) of the above.

()oooooooooooooo of both (a) and (c) of the above.

Answer:


)=? eople hold money even during inflationary episodes when other assets prove to be better stores of

value. This can be e9plained by the fact that money is

()pppppppppppppp e9tremely li'uid.

()'''''''''''''' a uni'ue good for which there are no substitutes.

()rrrrrrrrrrrrrr the only thing accepted in economic e9change.

()ssssssssssssss all of the above.

Answer:


)=1 3f the price level doubles, the value of money

()tttttttttttttt doubles.

()uuuuuuuuuuuuuu more than doubles, due to scale economies.

()vvvvvvvvvvvvvv rises but does not double, due to diminishing returns.

()wwwwwwwwwwwwww falls by -? percent.

Answer:


)=" 3f the level of prices falls by -? percent, the value of money

()99999999999999 falls by -?H.

()yyyyyyyyyyyyyy falls by 1??H.

() remains unchanged.

()aaaaaaaaaaaaaaarises by -?H.

()bbbbbbbbbbbbbbb doubles.

Answer:




;- #rederic S. /ish+in 0 Economics of Money, Banking, and Financial Markets, Seventh !dition

)= A fall in the level of prices

()cccccccccccccccdoes not affect the value of money.

()ddddddddddddddd has an uncertain effect on the value of money.

()eeeeeeeeeeeeeeeincreases the value of money.

()fffffffffffffff reduces the value of money.

()ggggggggggggggg is impossible.

Answer:


)= Guring hyperinflations,

()hhhhhhhhhhhhhhh the value of money rises rapidly.

()iiiiiiiiiiiiiii money no longer functions as a good store of value and people may resort to

barter transactions on a much larger scale.

()*************** middleCclass savers benefit as prices rise.

()+++++++++++++++ all of the above occur.

Answer:


)=- Guring hyperinflations,

()lllllllllllllll the value of money falls rapidly.

()mmmmmmmmmmmmmmm money no longer functions as a good store of value and the

volume of barter transactions increases.

()nnnnnnnnnnnnnnn debtors benefit as the real value of their debt falls.

()ooooooooooooooo all of the above occur.

Answer:


)=5 Guring periods of rapidly rising prices

()ppppppppppppppp money fails to serve as a good store of value.()''''''''''''''' money fails to serve as a unit of account.

()rrrrrrrrrrrrrrr money fails to serve as a medium of e9change.

()sssssssssssssss money fails to serve as a standard of value.


)=; 3f one observes a decline in the use of money to carry out transactions and an increase in barter

e9changes, then one can probably infer that

()ttttttttttttttt inflation has accelerated into hyperinflation.

()uuuuuuuuuuuuuuu money no longer serves as a store of value.

()vvvvvvvvvvvvvvv the use of money no longer significantly reduces transaction costs.

()wwwwwwwwwwwwwww all of the above.

()999999999999999 only (a) and (b) of the above.

Answer:




hapter 6hat 3s /oney> ;5

)== 6hen prices in a particular country rise e9tremely rapidly, the country suffers

()yyyyyyyyyyyyyyy deflation.

()disinflation.

()aaaaaaaaaaaaaaaa hyperinflation.

()bbbbbbbbbbbbbbbb all of the above.

Answer:


)= 7ecause inflation in 4icaragua in 1? topped 1,??? percent, one can conclude that the 4icaraguan

economy suffered from

()cccccccccccccccc deflation.

()dddddddddddddddd disinflation.

()eeeeeeeeeeeeeeee hyperinflation.

()ffffffffffffffff superdeflation.

Answer:


)? 3f merchants in the country Ied choose to close their doors, preferring to be stuc+ with rottingmerchandise rather than worthless currency, then one can conclude that Ied is e9periencing a

()gggggggggggggggg superdeflation.

()hhhhhhhhhhhhhhhh hyperdeflation.

()iiiiiiiiiiiiiiii disinflation.

()**************** hyperinflation.


)1 3f currency in the country of Ied is seen as worthless by its citiens, then Ied is probably

e9periencing a

()++++++++++++++++ superdeflation.()llllllllllllllll hyperdeflation.

()mmmmmmmmmmmmmmmm disinflation.

()nnnnnnnnnnnnnnnn hyperinflation.

Answer:


)" 3f merchants in the country Ied choose to close their doors, preferring to be stuc+ with rotting

merchandise rather than worthless currency, then one can conclude that money in Ied is

()oooooooooooooooo a poor store of value.

()pppppppppppppppp scarce relative to goods.

()'''''''''''''''' being heavily counterfeited.()rrrrrrrrrrrrrrrr all of the above.

()ssssssssssssssss none of the above.

Answer:




;; #rederic S. /ish+in 0 Economics of Money, Banking, and Financial Markets, Seventh !dition

) ompared to chec+s, paper currency and coins have the ma*or drawbac+s that they

()tttttttttttttttt are easily stolen.

()uuuuuuuuuuuuuuuu can be 'uite e9pensive to transport because of their bul+.

()vvvvvvvvvvvvvvvv are not the most li'uid assets.

()wwwwwwwwwwwwwwww all of the above.

()9999999999999999 only (a) and (b) of the above.

Answer:


) As a payments system evolves from barter to a monetary system, paper currency will replace

commodity money when

()yyyyyyyyyyyyyyyy trade e9pands over a larger region, increasing significantly the

transportation costs of commodity money.

() printing reaches a sufficiently advanced stage that counterfeiting becomes

e9tremely difficult.

()aaaaaaaaaaaaaaaaa large purchases, such as automobiles and houses, become more prevalent.

()bbbbbbbbbbbbbbbbb all of the above occur.

()ccccccccccccccccc only (a) and (b) of the above occur.

Answer:


)- As the payments system evolves from barter to a monetary system,

()ddddddddddddddddd commodity money is li+ely to precede the use of paper currency.

()eeeeeeeeeeeeeeeee transaction costs decline.

()fffffffffffffffff the number of prices that need to be calculated increase rather dramatically.

()ggggggggggggggggg all of the above.

()hhhhhhhhhhhhhhhhh only (a) and (b) of the above.

Answer:


)5 As the payments system evolves from barter to a monetary system,

()iiiiiiiiiiiiiiiii commodity money is li+ely to precede the use of paper currency.

()***************** transactions costs decline.

()+++++++++++++++++ the number of prices that need to be calculated decrease.

()lllllllllllllllll all of the above.

()mmmmmmmmmmmmmmmmm only (a) and (b) of the above.

Answer:




hapter 6hat 3s /oney> ;=

); The evolution of the payments system from barter to precious metals, then to fiat money, then to

chec+s can best be understood as a conse'uence of

()nnnnnnnnnnnnnnnnn government regulations designed to improve the efficiency of the

payments system.

()ooooooooooooooooo government regulations designed to promote the safety of the payments

system.

()ppppppppppppppppp innovations that reduced the costs of e9changing goods and services.()''''''''''''''''' all of the above.

()rrrrrrrrrrrrrrrrr only (a) and (c) of the above.

Answer:


)= The evolution of the payments system from barter to precious metals, then to fiat money, then to


()sssssssssssssssssgovernment regulations designed to improve the efficiency of the payments

system.

()ttttttttttttttttt competition among firms to ma+e it easier for customers to purchase their

products.()uuuuuuuuuuuuuuuuu innovations that reduced the costs of e9changing goods and services.

()vvvvvvvvvvvvvvvvv all of the above.

()wwwwwwwwwwwwwwwww only (b) and (c) of the above.

Answer:


) The evolution of the payments system from barter to precious metals, then to fiat money, then to


()99999999999999999 innovations that allowed individuals to escape oppressive ta9es.

()yyyyyyyyyyyyyyyyy the fact that precious metals were not generally acceptable.

() the fact that precious metals were difficult to carry and transport.()aaaaaaaaaaaaaaaaaa the fact that paper money is less accepted than chec+s.

()bbbbbbbbbbbbbbbbbb the fact that paper more costly to produce than precious metals.

Answer:Question Status: Study 8uide

)1?? 6hich of the following are true about the evolution of the payments system>

()cccccccccccccccccc The evolution of the payments system from barter to precious metals, then

to fiat money, then to chec+s can best be understood as a conse'uence of innovations that

reduced the costs of e9changing goods and services.

()dddddddddddddddddd recious metals had the advantage of being widely accepted, being

divisible into relatively small units, and being durable, but had the disadvantage of being

difficult to carry and transport from one place to another.

()eeeeeeeeeeeeeeeeee #iat money, paper money that the government ma+es legal tender, has the

advantage of being lighter than coins, yet it can still be costly to transport because of its bul+.

()ffffffffffffffffff All of the above are true.

Answer:




; #rederic S. /ish+in 0 Economics of Money, Banking, and Financial Markets, Seventh !dition

)1?1 6hich of the following se'uences accurately describes the evolution of the payments system>

()gggggggggggggggggg 7arter, coins made of precious metals, paper currency, chec+s, electronicfunds transfers.

()hhhhhhhhhhhhhhhhhh 7arter, coins made of precious metals, chec+s, paper currency, electronic

funds transfers.

()iiiiiiiiiiiiiiiiii 7arter, chec+s, paper currency, coins made of precious metals, electronic funds

transfers.()****************** 7arter, chec+s, paper currency, electronic funds transfers.

Answer:


)1?" 3n e9plaining the evolution of money

()++++++++++++++++++ government regulation is the most important factor.

()llllllllllllllllll commodity money, because it is valued more highly, tends to drive out paper

money.

()mmmmmmmmmmmmmmmmmm new forms of money evolve to lower transaction costs.

()nnnnnnnnnnnnnnnnnn all of the above are true.

Answer:Question Status: $evised

)1? !ven with the spread of electronic funds transfer systems (!#TS) to more users, chec+s are not

li+ely to be eliminated soon because

()oooooooooooooooooo people want paper receipts.

()pppppppppppppppppp chec+s reduce the incidence of fraud.

()'''''''''''''''''' ban+s are unli+ely to install the necessary electronic facilities.

()rrrrrrrrrrrrrrrrrr of all of the above.

()ssssssssssssssssss of both (a) and (b) of the above.

Answer:


)1? Guring the past two decades an important characteristic of the modern payments system has been

the rapidly increasing use of

()tttttttttttttttttt chec+s and decreasing use of currency.

()uuuuuuuuuuuuuuuuuu electronic fund transfers.

()vvvvvvvvvvvvvvvvvv commodity monies.

()wwwwwwwwwwwwwwwwww all of the above.


)1?- ompared to a payment system based on chec+s, an !#TS system has the advantage that()999999999999999999 transfers of funds are less costly.

()yyyyyyyyyyyyyyyyyy transfers of funds are completed instantaneously.

() legal liability is more clearly defined.

()aaaaaaaaaaaaaaaaaaa only (a) and (b) of the above.

Answer:




hapter 6hat 3s /oney> =?

)1?5 ompared to an !#TS system, a payments system based on chec+s has the ma*or drawbac+ that

()bbbbbbbbbbbbbbbbbbb chec+s are more costly to process.

()ccccccccccccccccccc chec+s ta+e longer to process, meaning that it may ta+e several days

before the depositor can get her cash.

()ddddddddddddddddddd fraud may be more difficult to commit when paper receipts are

eliminated.

()eeeeeeeeeeeeeeeeeee all of the above.

()fffffffffffffffffff both (a) and (b) of the above.

Answer:


)1?; A payments system based primarily on chec+s has the following disadvantages:

()ggggggggggggggggggg hec+s are costly to process.

()hhhhhhhhhhhhhhhhhhh hec+s are costly to transport.

()iiiiiiiiiiiiiiiiiii hec+s ta+e time to move through the chec+Cclearing system.

()******************* All of the above.

()+++++++++++++++++++ @nly (a) and (b) of the above.

Answer:


)1?= A smart card is the e'uivalent of

()lllllllllllllllllll cash.

()mmmmmmmmmmmmmmmmmmm chec+s.

()nnnnnnnnnnnnnnnnnnn savings deposits.

()ooooooooooooooooooo certificates of deposit.

()ppppppppppppppppppp savings bonds.

Answer:


)1? 6hich of the following forms of electronic money is a substitute for cash>

()''''''''''''''''''' a debit card

()rrrrrrrrrrrrrrrrrrr a storedCvalue card

()sssssssssssssssssss a smart card

()ttttttttttttttttttt all of the above

()uuuuuuuuuuuuuuuuuuu only (b) and (c) of the above

Answer:


)11? 6hich of the following forms of electronic money is not a substitute for cash>

()vvvvvvvvvvvvvvvvvvv a debit card

()wwwwwwwwwwwwwwwwwww a credit card

()9999999999999999999 a storedCvalue card

()yyyyyyyyyyyyyyyyyyy a smart card

() all of the above

Answer:




=1 #rederic S. /ish+in 0 Economics of Money, Banking, and Financial Markets, Seventh !dition

)111 As part of the Gecember 11 /aastrict Treaty of !uropean Jnion, the e9change rates of countries

entering the monetary union, starting Kanuary 1, 1, were

()aaaaaaaaaaaaaaaaaaaa fi9ed permanently to the euro.

()bbbbbbbbbbbbbbbbbbbb allowed to float for the ne9t si9 months before being fi9ed

permanently to the euro.

()cccccccccccccccccccc allowed to float for the ne9t year before being fi9ed permanently to the

euro.()dddddddddddddddddddd allowed to float permanently against the euro.

Answer:


)11" Advocates of the !uropean monetary union point to the advantages that a single currency has in

()eeeeeeeeeeeeeeeeeeee eliminating the transaction costs involved in having to e9change the

currency of one country for the currency of another.

()ffffffffffffffffffff delaying the economic integration of !uropean countries.

()gggggggggggggggggggg allowing member countries to repudiate their government debts.

()hhhhhhhhhhhhhhhhhhhh doing all of the above.


)11 Advocates of monetary union claim that the adoption of a common currency by 8ermany in 1?

had the advantages of

()iiiiiiiiiiiiiiiiiiii eliminating the transaction costs of e9changing the currencies of !ast and 6est

8ermany.

()******************** hastening the economic integration of the two countries.

()++++++++++++++++++++ ma+ing !ast 8ermany<s good cheaper for 6est 8erman citiens.

()llllllllllllllllllll all of the above.

()mmmmmmmmmmmmmmmmmmmm both (a) and (b) of the above.


)11 Advocates of monetary union claim that the adoption of a common currency by 8ermany in 1?

had the advantages of

()nnnnnnnnnnnnnnnnnnnn eliminating the transaction costs of e9changing the currencies of

!ast and 6est 8ermany.

()oooooooooooooooooooo slowing the economic integration of the two countries, thereby

allowing !ast 8erman citiens time to ad*ust to capitalism.

()pppppppppppppppppppp ma+ing !ast 8ermany<s good cheaper for 6est 8erman citiens.

()'''''''''''''''''''' all of the above.

()rrrrrrrrrrrrrrrrrrrr both (a) and (b) of the above.Answer:




hapter 6hat 3s /oney> ="

)11- $ecent financial innovation ma+es the #ederal $eserve<s *ob of conducting monetary policy

()ssssssssssssssssssss easier, since the #ed now +nows what to consider money.

()tttttttttttttttttttt more difficult, since the #ed now +nows what to consider money.

()uuuuuuuuuuuuuuuuuuuu easier, since the #ed no longer +nows what to consider money.

()vvvvvvvvvvvvvvvvvvvv more difficult, since the #ed no longer +nows what to consider

money.

Answer:


)115 Gefining money becomes FFFFFFF difficult as the pace of financial innovation FFFFFFFF.

()wwwwwwwwwwwwwwwwwwww less 'uic+ens

()99999999999999999999 more 'uic+ens

()yyyyyyyyyyyyyyyyyyyy more slows

() more stops

()aaaaaaaaaaaaaaaaaaaaa none of the above

Answer:


)11; The narrowest measure of money that the #ed reports is

()bbbbbbbbbbbbbbbbbbbbb /?.

()ccccccccccccccccccccc /1.

()ddddddddddddddddddddd /".

()eeeeeeeeeeeeeeeeeeeee /.


)11= Today, most money in the Jnited States is in the form of

()fffffffffffffffffffff currency.

()ggggggggggggggggggggg currency and coins.()hhhhhhhhhhhhhhhhhhhhh chec+able deposits.

()iiiiiiiiiiiiiiiiiiiii savings bonds.

Answer:


)11 6hich of the following is not included in the measure of /1>

()********************* 4@6 accounts

()+++++++++++++++++++++ Gemand deposits

()lllllllllllllllllllll urrency

()mmmmmmmmmmmmmmmmmmmmm $epurchase agreements

Answer:


)1"? 6hich of the following is not included in the measure of /1>

()nnnnnnnnnnnnnnnnnnnnn Traveler<s chec+s

()ooooooooooooooooooooo Gemand deposits

()ppppppppppppppppppppp urrency

()''''''''''''''''''''' 8old coins issued by the J.S. Treasury

Answer:



= #rederic S. /ish+in 0 Economics of Money, Banking, and Financial Markets, Seventh !dition


)1"1 The components of the J.S. /1 money supply are demand and chec+able deposits plus

()rrrrrrrrrrrrrrrrrrrrr currency.

()sssssssssssssssssssss currency plus savings deposits.

()ttttttttttttttttttttt currency plus travelers chec+s.

()uuuuuuuuuuuuuuuuuuuuu currency plus travelers chec+s plus money mar+et deposits.Answer:


)1"" The /1 measure of money includes

()vvvvvvvvvvvvvvvvvvvvv small denomination time deposits.

()wwwwwwwwwwwwwwwwwwwww money mar+et deposit accounts.

()999999999999999999999 money mar+et mutual fund shares.

()yyyyyyyyyyyyyyyyyyyyy demand deposits.

Answer:


)1" The /1 measure of money includes

() small denomination time deposits.

()aaaaaaaaaaaaaaaaaaaaaa savings deposits.

()bbbbbbbbbbbbbbbbbbbbbb money mar+et deposit accounts.

()cccccccccccccccccccccc money mar+et mutual fund shares.

()dddddddddddddddddddddd traveler<s chec+s.

Answer:


)1" The /1 measure of money includes

()eeeeeeeeeeeeeeeeeeeeee small denomination time deposits.()ffffffffffffffffffffff savings deposits.

()gggggggggggggggggggggg money mar+et deposit accounts.

()hhhhhhhhhhhhhhhhhhhhhh money mar+et mutual fund shares.

()iiiiiiiiiiiiiiiiiiiiii currency.

Answer:


)1"- 6hich of the following is not included in the monetary aggregate /">

()********************** urrency

()++++++++++++++++++++++ /oney mar+et deposit accounts

()llllllllllllllllllllll Traveler<s chec+s()mmmmmmmmmmmmmmmmmmmmmm hec+ing deposits

()nnnnnnnnnnnnnnnnnnnnnn Savings bonds

Answer:




hapter 6hat 3s /oney> =

)1"5 6hich of the following is included in /" but not in /1>

()oooooooooooooooooooooo 4@6 accounts

()pppppppppppppppppppppp Gemand deposits

()'''''''''''''''''''''' urrency

()rrrrrrrrrrrrrrrrrrrrrr /oney mar+et mutual fund shares (noninstitutional)

()ssssssssssssssssssssss 8old coins issued by the J.S. Treasury

Answer:


)1"; 6hich of the following is included in /" but not in /1>

()tttttttttttttttttttttt 4@6 accounts

()uuuuuuuuuuuuuuuuuuuuuu /oney mar+et deposit accounts

()vvvvvvvvvvvvvvvvvvvvvv Gemand deposits

()wwwwwwwwwwwwwwwwwwwwww Traveler<s chec+s

Answer:


)1"= 6hich of the following is included in the /1 measure of money but is not included in the /"measure of money>

()9999999999999999999999 urrency

()yyyyyyyyyyyyyyyyyyyyyy hec+able deposits

() Traveler<s chec+s

()aaaaaaaaaaaaaaaaaaaaaaa All of the above

()bbbbbbbbbbbbbbbbbbbbbbb 4one of the above

Answer:


)1" 6hich of the following is not included in the /" measure of money but is included in the /1

measure of money>()ccccccccccccccccccccccc urrency

()ddddddddddddddddddddddd Gemand deposits

()eeeeeeeeeeeeeeeeeeeeeee Traveler<s chec+s

()fffffffffffffffffffffff @ther chec+able deposits

()ggggggggggggggggggggggg 4one of the above


)1? 6hich of the following is not included in the /" measure of money but is included in the /1

measure of money>

()hhhhhhhhhhhhhhhhhhhhhhh Small denomination time deposits

()iiiiiiiiiiiiiiiiiiiiiii Savings deposits

()*********************** hec+able deposits

()+++++++++++++++++++++++ All of the above

()lllllllllllllllllllllll 4one of the above

Answer:




=- #rederic S. /ish+in 0 Economics of Money, Banking, and Financial Markets, Seventh !dition

)11 6hich of the following is not included in the /1 measure of money but is included in the /"

measure of money>

()mmmmmmmmmmmmmmmmmmmmmmm urrency

()nnnnnnnnnnnnnnnnnnnnnnn Traveler<s chec+s

()ooooooooooooooooooooooo Gemand deposits

()ppppppppppppppppppppppp Small denomination time deposits

Answer:


)1" 6hich of the following is not included in the /1 measure of money but is included in the /"

measure of money>

()''''''''''''''''''''''' Savings deposits

()rrrrrrrrrrrrrrrrrrrrrrr Gemand deposits

()sssssssssssssssssssssss Traveler<s chec+s

()ttttttttttttttttttttttt @ther chec+able deposits

Answer:


)1 6hich of the following is included in both /1 and /">

()uuuuuuuuuuuuuuuuuuuuuuu urrency

()vvvvvvvvvvvvvvvvvvvvvvv Savings deposits

()wwwwwwwwwwwwwwwwwwwwwww Small time deposits

()99999999999999999999999 /oney mar+et deposit accounts

()yyyyyyyyyyyyyyyyyyyyyyy Savings bonds

Answer:


)1 @f the following, the largest is

() currency.()aaaaaaaaaaaaaaaaaaaaaaaa chec+ing deposits.

()bbbbbbbbbbbbbbbbbbbbbbbb /1.

()cccccccccccccccccccccccc /".

()dddddddddddddddddddddddd /.

Answer:


)1- 3f an individual redeems a J.S. savings bond for currency

()eeeeeeeeeeeeeeeeeeeeeeee /1 stays the same and /" decreases.

()ffffffffffffffffffffffff /1 increases and /" decreases.

()gggggggggggggggggggggggg /1 increases and /" stays the same.

()hhhhhhhhhhhhhhhhhhhhhhhh /1 stays the same and /" stays the same.

()iiiiiiiiiiiiiiiiiiiiiiii /1 increases and /" increases.

Answer:




=; #rederic S. /ish+in 0 Economics of Money, Banking, and Financial Markets, Seventh !dition

)11 3f an individual moves money from a savings deposit account to a money mar+et deposit account,

()ddddddddddddddddddddddddd /1 decreases and /" stays the same.

()eeeeeeeeeeeeeeeeeeeeeeeee /1 stays the same and /" increases.

()fffffffffffffffffffffffff /1 stays the same and /" stays the same.

()ggggggggggggggggggggggggg /1 increases and /" decreases.

Answer:


)1" 3f an individual moves money from a money mar+et deposit account to a demand deposit account,

()hhhhhhhhhhhhhhhhhhhhhhhhh /1 decreases and /" stays the same.

()iiiiiiiiiiiiiiiiiiiiiiiii /1 stays the same and /" increases.

()************************* /1 stays the same and /" stays the same.

()+++++++++++++++++++++++++ /1 increases and /" stays the same.

Answer:


)1 3f an individual moves money from a (noninstitutional) money mar+et mutual fund to a savings

deposit account,()lllllllllllllllllllllllll /1 increases and /" stays the same.

()mmmmmmmmmmmmmmmmmmmmmmmmm /1 stays the same and /" increases.

()nnnnnnnnnnnnnnnnnnnnnnnnn /1 stays the same and /" stays the same.

()ooooooooooooooooooooooooo /1 increases and /" decreases.

Answer:


)1 3f an individual moves money from currency to a money mar+et deposit account,

()ppppppppppppppppppppppppp /1 decreases and /" stays the same.

()''''''''''''''''''''''''' /1 stays the same and /" increases.

()rrrrrrrrrrrrrrrrrrrrrrrrr /1 stays the same and /" stays the same.

()sssssssssssssssssssssssss /1 increases and /" decreases.

Answer:


)1- 3f an individual moves money from currency to a demand deposit account,

()ttttttttttttttttttttttttt /1 decreases and /" stays the same.

()uuuuuuuuuuuuuuuuuuuuuuuuu /1 stays the same and /" increases.

()vvvvvvvvvvvvvvvvvvvvvvvvv /1 stays the same and /" stays the same.

()wwwwwwwwwwwwwwwwwwwwwwwww /1 increases and /" stays the same.

Answer:




hapter 6hat 3s /oney> ==

)15 3f an individual moves money from a (noninstitutional) money mar+et mutual fund to a largeC

denomination time deposit account,

()9999999999999999999999999 /" decreases and / stays the same.

()yyyyyyyyyyyyyyyyyyyyyyyyy /" stays the same and / increases.

() /" stays the same and / stays the same.

()aaaaaaaaaaaaaaaaaaaaaaaaaa /" increases and / decreases.

Answer:


)1; 3f an individual moves money from a money mar+et deposit account to currency,

()bbbbbbbbbbbbbbbbbbbbbbbbbb /1 increases and /" stays the same.

()cccccccccccccccccccccccccc /1 stays the same and /" increases.

()dddddddddddddddddddddddddd /1 stays the same and /" stays the same.

()eeeeeeeeeeeeeeeeeeeeeeeeee /1 increases and /" decreases.

Answer:


)1= 3f an individual moves money from a (noninstitutional) money mar+et mutual fund to a moneymar+et deposit account,

()ffffffffffffffffffffffffff /" decreases and / stays the same.

()gggggggggggggggggggggggggg /" stays the same and / increases.

()hhhhhhhhhhhhhhhhhhhhhhhhhh /" stays the same and / stays the same.

()iiiiiiiiiiiiiiiiiiiiiiiiii /" increases and / decreases.


)1 The growth rates of monetary aggregates

()************************** follow one another e9actly.

()++++++++++++++++++++++++++ tend to move together in the short run but not in the long run.()llllllllllllllllllllllllll are unrelated in the long run.

()mmmmmmmmmmmmmmmmmmmmmmmmmm tend to move together in the long run but

can diverge in the short run.

()nnnnnnnnnnnnnnnnnnnnnnnnnn are most closely related during the 1?s.

Answer:


)1-? The decade during which the growth rates of monetary aggregates diverged the most is

()oooooooooooooooooooooooooo the 1-?s.

()pppppppppppppppppppppppppp the 15?s.

()'''''''''''''''''''''''''' the 1;?s.

()rrrrrrrrrrrrrrrrrrrrrrrrrr the 1=?s.

()ssssssssssssssssssssssssss the 1?s.

Answer:




= #rederic S. /ish+in 0 Economics of Money, Banking, and Financial Markets, Seventh !dition

)1-1 8enerally, the data initially reported by the #ed are

()tttttttttttttttttttttttttt not a reliable guide to the shortCrun behavior of the money supply.

()uuuuuuuuuuuuuuuuuuuuuuuuuu a reliable guide to the longCrun behavior of the money supply.

()vvvvvvvvvvvvvvvvvvvvvvvvvv a reliable guide to the shortCrun behavior of the money supply.

()wwwwwwwwwwwwwwwwwwwwwwwwww both (a) and (b) of the above.

()99999999999999999999999999 both (b) and (c) of the above.

Answer:


)1-" An e9amination of revised money supply statistics, when compared to the initial statistics, suggests

that

()yyyyyyyyyyyyyyyyyyyyyyyyyy the initial statistics are pretty good.

() the initial statistics do not provide a good guide to shortCrun

movements in the money supply.

()aaaaaaaaaaaaaaaaaaaaaaaaaaa the initial statistics provide a poor guide of monetary policy

because they are usually underestimates of the revised statistics.

()bbbbbbbbbbbbbbbbbbbbbbbbbbb the initial statistics provide a good guide of monetary

policy, though they are usually underestimates of the revised statistics.

Answer:


)1- The #ed revises its estimates of the monetary aggregates, sometimes by large amounts, because

()ccccccccccccccccccccccccccc large depository institutions need only report their deposits

infre'uently.

()ddddddddddddddddddddddddddd wee+ly monetary data need to be ad*usted for the

%wee+end effect.&

()eeeeeeeeeeeeeeeeeeeeeeeeeee monthly monetary data need to be ad*usted for the %payday

effect.&

()fffffffffffffffffffffffffff of none of the above.Answer:


)1- The #ed revises its estimates of the monetary aggregates, sometimes by large amounts, because

()ggggggggggggggggggggggggggg small depository institutions need only report their

deposits infre'uently.

()hhhhhhhhhhhhhhhhhhhhhhhhhhh seasonal ad*ustments become more precise only as more

data become available.

()iiiiiiiiiiiiiiiiiiiiiiiiiii monthly monetary data need to be ad*usted for the %payday effect.&

()*************************** of all of the above.

()+++++++++++++++++++++++++++ of only (a) and (b) of the above.Answer:




hapter 6hat 3s /oney> ?

)1-- 6hich of the following statements accurately describes the three different measures of the money

supply2/1, /", and />

()lllllllllllllllllllllllllll The three measures do not move together, so they cannot be used

interchangeably by policyma+ers.

()mmmmmmmmmmmmmmmmmmmmmmmmmmm The three measures< movements closely

parallel each other, even on a monthCtoCmonth basis.

()nnnnnnnnnnnnnnnnnnnnnnnnnnn ShortCrun movements in the money supply are e9tremelyreliable.

()ooooooooooooooooooooooooooo 7oth (a) and (c) of the above.

Answer:


)1-5 6hich of the following statements accurately describes the three different measures of the money


()ppppppppppppppppppppppppppp /1 is the narrowest measure.

()''''''''''''''''''''''''''' 3nitial estimates of the money supply are not a reliable

guide to what is happening to the money supply in the short run.

()rrrrrrrrrrrrrrrrrrrrrrrrrrr The three measures do not move together, so they cannot be usedinterchangeably by policyma+ers.

()sssssssssssssssssssssssssss All of the above.

()ttttttttttttttttttttttttttt @nly (a) and (b) of the above.

Answer:


)1-; 6hich of the following statements accurately describes the three different measures of the money


()uuuuuuuuuuuuuuuuuuuuuuuuuuu /" is the narrowest measure.

()vvvvvvvvvvvvvvvvvvvvvvvvvvv 3nitial estimates of the money supply are a reliable guide

to what is happening to the money supply in the short run.

()wwwwwwwwwwwwwwwwwwwwwwwwwww The three measures do not move together, so they

cannot be used interchangeably by policyma+ers.

()999999999999999999999999999 All of the above.

()yyyyyyyyyyyyyyyyyyyyyyyyyyy @nly (a) and (b) of the above.

Answer:


Essay Questions

!9plain the functions of money and the problems of barter that each overcomes.

)1 Giscuss the advantages and disadvantages of monetary union in !urope.

)" The payments system has evolved from commodity money to fiat money to chec+s to electronic

money. Giscuss one advantage and one disadvantage of each form of money.

mishkin tb03

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