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11 Cards in this Set
- Front
- Back
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Banks usually offer higher rates of interest to people willing to keep there funds in the bank longer because:
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Bankers realize time has value and people need to be compensated if they are to keep their money in the bank longer.
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Identify which of the following is not one of the five core principles of money and banking:
a) Risk requires compensation b) Time has value c) Information is the basis for decisions d) Stability creates risk |
d) Stability creates risk
-Stability improves welfare -Markets determine prices and allocate resources |
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In the United States, control of the money supply is given to:
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The Federal Reserve System
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Which of the following would not be considered a characteristic of money?
a) It is a store of value b) It is a means of payment c) It must have intrinsic value d) It is a unit of account |
c) It must have intrinsic value
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The unit of account characteristic of money:
a) Makes it difficult to compare the relative prices of goods and services b) Refers to how we use money to transfer purchasing power over time c) Means all prices are expressed in terms of money d) Means that money finalizes payments |
c) Means all prices are expressed in terms of money
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The high transaction costs associated with a barter system refers to:
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The high cost associated with finding someone with whom to exchange.
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In comparing money to a U.S. Treasury bond held by an individual, we can say:
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Both are stores of value
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To say an asset is liquid implies that:
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We are considering assets that may be readily converted into a means of payment
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Investing in financial instruments in today's economy:
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Is made easier by the use of mutual funds
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What is the use of financial institutions?
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Financial institutions can transfer resources and risk between people.
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When an individual obtains a car loan and makes all of the regular monthly payments, the sum of the payments made will exceed the purchase price of the car. This is due primarily to the core principle:
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Time has value
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