ECON131-HW11

18) What is the central bank in the US called? A) The Central Bank of America C) The Federal Reserve B) The Bank of America D) The US Bank

C) The Federal Reserve

15) Suppose M2 for the US was $7,000 in 2009. Which of the following could be M1 for the US in 2009? A) $5,000 B) $7,500 C) $10,000 D) $14,000

A) $5,000

1) Money is best defined as A) anything accepted as a means of payment. B) anything that is backed by gold. C) anything that has value. D) currency.

A) anything accepted as a means of payment.

3) Barter requires the A) exchange of goods and services directly for other goods and services. B) use of money as a unit of account. C) use of commodity money as a medium of payment. D) use of fiat money as a medium of exchange.

A) exchange of goods and services directly for other goods and services.

24) When the Fed sells $100 million of government bonds to the public, the money supply A) is decreased by $100 million. B) is increased by $100 million. C) is unchanged in size, though its composition changes. D) will increase by a multiple of $100 million over time.

A) is decreased by $100 million.

5) In performing which of its primary functions does money solve the problem of the double coincidence of wants? A) medium of exchange B) money of supply C) store of value D) unit of account

A) medium of exchange

16) The above table has information about the hypothetical economy of Robotica. Based on the data, the size of M1 is A) $600 billion. B) $610 billion. C) $2,600 billion. D) $1,510 billion.

B) $610 billion.

22) When the Fed buys or sells government bonds, it is conducting ________ operation. A) a government debt B) an open market C) a currency D) a deposit

B) an open market

12) M1 is composed of A) currency held by individuals and businesses, traveler's checks, and the credit line on credit cards. B) currency held by individuals and businesses, traveler's checks, and demand deposits owned by individuals and businesses. C) currency inside of banks, traveler's checks, and credit cards. D) demand deposits owned by individuals and businesses, saving deposits, and certificates of deposit.

B) currency held by individuals and businesses, traveler's checks, and demand deposits owned

23) If the Fed makes an open market purchase of $1 million of government bonds, the money supply A) is decreased by $1 million. B) is increased by $1 million. C) is unchanged in size, though its composition changes. D) will decrease by a multiple of $1 million over time.

B) is increased by $1 million.

7) When we put a price tag on goods and services, we are using money as a A) barter token. B) unit of account. C) store of value. D) medium of exchange.

B) unit of account.

20) Which of the following is NOT one of the primary functions of the Federal Reserve System? A) Regulating commercial banks to ensure they follow federal laws B) Acting as a banker's bank C) Conducting fiscal policy D) Conducting monetary policy

C) Conducting fiscal policy

21) The Fed's monetary policy is determined by the A) Regional Federal Reserve Banks. B) Federal Monetary Policy Committee. C) Federal Open Market Committee. D) Executive Council to the Governor.

C) Federal Open Market Committee.

6) The unit of account is defined as A) barter. B) the exchange of goods and services directly for other goods and services. C) an agreed upon measure for stating prices of goods and services. D) an object that is accepted in return for goods and services.

C) an agreed upon measure for stating prices of goods and services.

4) The medium of exchange is defined as A) an item that can be stored and hold its value over time. B) the exchange of goods and services directly for goods and services. C) an object that is accepted in return for goods and services. D) credit cards.

C) an object that is accepted in return for goods and services.

9) The store of value function is defined as the 9) A) double coincidence of wants that is used in the debate over barter versus money. B) exchange of goods and services directly for other goods and services. C) holding of money from one transaction to be used later in another transaction. D) pricing of goods and services in one measure.

C) holding of money from one transaction to be used later in another transaction.

8) Money is used as a ________ when you visit the local farmers' market and compare prices across different vendors. A) means of payment B) medium of exchange C) unit of account D) store of value

C) unit of account

17) The above table has information about the hypothetical economy of Robotica. Based on the data, 17) the size of M2 is A) $610 billion. B) $1,710 billion. C.2,610 billion D.) 2,900 billion

C.2,610 billion

19) The Federal Reserve System is organized into A) three districts, one for each of the countries in North America. B) 50 districts, one per state, and Federal Reserve Board in Washington DC. C) one large district - Federal Reserve Board in Washington DC, covering the entire United States. D) Federal Reserve Board in Washington DC and 12 districts, dividing up the United States.

D) Federal Reserve Board in Washington DC and 12 districts, dividing up the United States.

14) M2 consists of A) M1 plus traveler's checks, credit cards, and money market mutual funds. B) M1 plus Federal Reserve notes, and the credit line on credit cards. C) M1 plus demand deposits, certificates of deposit, and saving deposits. D) M1 plus saving deposits, small time deposits, and money market mutual funds.

D) M1 plus saving deposits, small time deposits, and money market mutual funds.

25) To increase the quantity of money in the economy, the Federal Reserve can A) increase government spending. B) cut taxes. C) sell government bonds in an open market operation. D) buy government bonds in an open market operation.

D) buy government bonds in an open market operation.

2) The functions of money are A) medium of exchange, the ability to buy goods and services, and checking accounts. B) store of value, use as a barter mechanism, and unit of account. C) credit cards, checking accounts, currency, and coins. D) medium of exchange, unit of account, and store of value.

D) medium of exchange, unit of account, and store of value.

13) Which of the following is NOT a component of M1? A) currency C) traveler's checks B) demand deposits D) savings deposits

D) savings deposits

10) When we keep part of our wealth in a bank checking account, we are using money as a A) medium of exchange. C) unit of account. B) unit of currency. D) store of value.

D) store of value.

11) Fiat money means A) the money that has intrinsic value. B) only currency counts as money. C) the money can be converted into gold. D) the government has decreed that something is money.

D) the government has decreed that something is money