Chapter 14 ECON Sample Quiz
Which of the following defines the "unit of account" function of money?
A common measurement of the relative value of different goods and services
Which of the following is NOT part of the Federal Reserve System?
Council of Economic Advisers
Which of the following is in charge of the buying and selling of government securities by the Fed?
Federal Open Market Committee (FOMC)
Which of these institutions has the responsibility for controlling the money supply?
Federal Reserve System
Which definition of the money supply includes credit cards, or "plastic money"?
M1 & M2
Which of the following defines the "medium of exchange" function of money?
Money that is widely accepted in exchange for goods and services
What establishes the value of fiat money?
Our collective trust and confidence that the central government, which decrees that money cannot be refused as payment for debt
Which of the following is NOT one of the functions of the Federal Reserve?
Printing currency
M1 refers to
all - the most narrowly defined money supply, currency held by the public plus checking account balance, the smallest dollar amount of the money supply definitions
The M1 definition of the money supply consists of
coins and currency in circulation, and checkable deposits
Which of the following is not a store of value?
credit card
Which of the following is NOT part of M1?
credit cards
The major protection against sudden mass attempts to withdraw cash from banks is the
deposit insurance provided by the FDIC
Which of the following is a problem with barter?
individuals' wants must coincide in order for there to be exchange
Which of the following is NOT a characteristic of money?
it is always backed by something of high intrinsic value such as gold or silver
Which of the following is part of the M2 definition of the money supply, but not part of M1?
money market mutual fund shares
The easier it is to convert an asset directly into goods and services without loss, the
more liquid it is
Which of the following items is NOT included when computing M1?
savings accounts
If a society were to use a widely accepted, easily measurable, but highly perishable food product as its money, which of the following functions of money would be most impaired?
store of value
Which of the following defines the "store of value" function of money?
the ability of money to hold value over time