Chapter 8 Money

Rank the following assets in terms of liquidity. Most to least. a) Saving Accounts b)Cash c)Land d) U.S. Saving Bond

Cash Saving Account Saving Bond Land

The four characterisitcs of assets that are the most important to holder of wealth are?

Expected Return, Risk, Liquidity, and Time to Maturity.

If all the money was heald in the form of currency, what would happen in the Federal Reserve bought financial assets from the public? The money supply would_____?

Increase

Suppose that Sam Student buys a new iPod for $200. In this example, money serves the role of _______?

Medium of Exchange?

Which of the statements below, regarding the function of money is true?

Money serves as a medium of exchange, as a unit of account, and as a store of value.

Suppose that Sam Student saved $15 every week for the past 10 weeks in order to buy the iPod. Here, money served the role of________?

Store Value

Define the velocity of money.

The ratio of nominal GDP to the amount of money in circulation

Sammy Student noticed that an iPod was priced at $200, a competing MP# player was selling for $100. When he realized the iPod was twice as expensive as the MP3 player, money served the role of_______?

Unit of account