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45 Cards in this Set
- Front
- Back
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When money is used as acceptance for payment of goods and services, it is being used as a _______ Unit of account, Medium of Exchange, or Store value |
Medium of exchange |
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When money is used to express the relative value of goods and services, it is being use as a ________ Unit of account, Medium of Exchange, or Store value |
Unit of account |
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When money is used to hold purchasing power for future use, it is being used as a _______ Unit of account, Medium of Exchange, or Store value |
Store Value |
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The payment system is A. an illegal method of rewarding contracts B. used by your employer to determine salary increases C. the method of conducting transaction in the economy D. used by union official to set salary caps
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the method of conducting transactions in the economy |
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In Brazil, a country that underwent a rapid inflation before 1994, many transactions were conducted in dollars rather than in reals, the domestic currency. During this period, the US dollar served what property or properties in Brazil A.Unit of account B. Medium of exchange C.Store value D. a and b are correct E. b and c are correct F. a b and c are correct |
F a b and c are correct |
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Paper currency that has been declared legal tender but is not convertible into coins or precious metals is called _____ money A. electronic B. commodity C. funny D. fiat |
D fiat |
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Assume that you are interested in earning some return on isdle balances you usually keep in your checking account and decide to buy some money market mutual fund shares by writing a check Everything else the same, M1 will _______ (increase, or decrease) and M2 will _______. (increase, decrease, or stay the same) |
Decrease and stay the same |
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When economists say that money promotes ______ they mean that money encourages specialization and the division of labor A. contracting B.Efficiency C. greed D. bargaining |
efficiency |
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Money is A. the total collection of pieces of property that are a store of value B. always based on a precious metal like gold or silver C. a flow of earnings per unit of time D. anything that is generally accepted in payment for goods and services or in the repayment of debt |
anything that is generally accepted in payment for goods and services or in the repayment of debt. |
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Investment capital stock or wealth |
Capital stock |
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Deficit spending Debt or inventory |
debt |
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Quantity supplied (produced) Wealth or inventory |
inventory |
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profits Inventory or Equity |
Equity |
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Savings per month wealth or capital stock |
wealth |
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When money is used as acceptance for payment of goods and services, it is being used as a Medium of exchange or Unit of account |
Medium of exchange |
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When money is used to express the relative value of goods and services, it is being used as a? Store of value or Unit of account |
Unit of account |
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When money is used to hold purchasing power for future use, it is being used as a Medium of exchange or store value |
store value |
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all of the following are necessary criteria for a commodity to function as money except A.it must be widely accepted B. it must be easy to carry C. it must be divisible D. it must deteriorate quickly |
It must deteriorate quickly |
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Which of the following is not included in the M1 measure of money but is included in the M2 measure? A. Small -denomination time deposits B. Demand deposits C. Travelers checks D. Currency |
Small-denomination time deposits |
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An individual's annual salary is her A.Income B. Money C.Wealth D. Liabilities |
Income |
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If the price level doubles, the value of money A. more than doubles, due to scale economies B. fall by 50 percent C. rises but does not double, due to diminishing returns D. doubles |
Falls by 50 percent |
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In ancient Greece, what property made gold a more likely candidate for use as money than wine. Gold's property as a ______ made it a more likely candidate for use as money when compared to wine. A. store value B. unit of account C. medium of exchange |
store of value |
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The components of the U.S. M1 money supply are demand and checkable deposits plus A.Currency B. Currency plus savings deposits C. currency plus travelers checks |
Currency plus travelers checks |
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Which of the following is a disadvantage of using checks as a means of payment? A.There is a maximum dollar amount for which check may be used B. Checks are seldom accepted for small to moderate purchases C. Checks are only accepted by businesses sharing a bank with the check writer D. all of the paper shuffling required to process checks is costly |
All of the paper shuffling required to process checks is costly |
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Why is simply counting currency an inadequate measure of money? A.Currency is too broad a definition of money, and often means many things B. There are other liquid assets similar to currency that can be used as money to purchase goods and services C. Simply counting currency can often overstate an individual's wealth or income |
There are other liquid assets similar to currency that can be used as money to purchase goods and services |
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In a barter economy the number of prices in an economy with N goods is A. N(N/2)-1 B. N(N/2)-1 C. 2N D. [N(N-1)]/2 |
[N(N-1)]/2 |
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During hyperinflations A. middle-class savers benefit as prices rise B. the value of money rises rapidly C. Money no longer functions as a good store of value and people may resort to barter transactions on a much larger scale |
Money no longer functions as a good store of value and people may resort to barter transactions on a much larger scale |
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A persons house is part of her A. money B. liabilities C. wealth |
wealth |
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Compared to an electronic payments system, a payments system based on checks has the major drawback that A. legal liability is more clearly defined B. checks take longer to process, meaning that it may take several days before the depositor can get her cash C. checks are less costly to process |
Checks take longer to process, meaning that it may take several days before the depositor can get her cash |
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An important characteristic of the modern payments system has been the rapidly increasing use of A. Fiat monet B. Electronic funds C. Commodity monies |
Electronic funds |
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When paper currency is decreed by government as legal tender, legally it must be _____ A. accepted as payment for debts B. convertible into an electronic payment C. a precious metal such as gold or silver |
accepted as payment for debts |
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The M2 monetary aggregate contains everything that is in M1 plus other assets that are highly ______ (can be turned into cash quickly at very little cost) A. Stable B. efficient C. consistent D. liquid |
liquid |
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_____ money could be used for some other purpose other than as a medium of exchange, for example, gold coins could be melted down and turned into gold jewelry A.Fiat B. Paper C. Commodity |
Commodity |
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Which of the following is a true statement A. Money is a flow variable B. Income is a flow variable C. Money and income are stock variables |
Income is a flow variable |
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Which of the following is included in both M1 and M2 A. money market deposit accounts B. small- denomination time deposits C. currency D. savings deposits |
Currency |
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Debt The accumulation |
What you owe the accumulation of spending over and above periodic earnings |
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Money - Tool |
A tool used to facilitate transactions, store wealth, or to be used as a yard stick to compare values |
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Income - Earnings |
Earnings received from working, property rentals, or the ownership of financial assets |
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Savings - adds total wealth |
The difference between what is earned and what is spent - add total wealth |
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Wealth - total collection of assets that you.... |
What you own. |
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Money may serve as an investment that allows for comparison of various goods and services. What function of money does this describe? A. Medium of exchange. B. Store of value C. Unit of account |
Unit of account |
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There are five goods in a barter economy, one needs to know ten prices in order to exchange one good for another. If, however, there are ten goods in a barter system, then one need to know _____ prices in order to exchange one good for another. A. 20 B. 25 C. 30 D. 45 |
45 |
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Compared to checks, paper currency and coins have the major drawbacks that they A. are easily stolen B. are hard to counterfeit C. must be backed by gold D. are not the most liquid assets |
are easily stolen |
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A smart card is the equivalent of A. savings bonds B. Cash C. Certificates of deposit D. savings deposits |
Cash |
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Compared to an economy that uses a medium of exchange, in a barter economy A. Transaction costs are higher B. transaction costs are lower C. liquidity costs are higher D. liquidity costs are lower |
transaction costs are higher |
