Econ ch 27

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Which of the following limits the effectiveness of a barter economy?

A barter economy prevents an economy from growing. A barter economy does not accommodate future contracts well. A barter economy is an inefficient way to exchange goods and services.

Which of the following is an example of a commodity-backed currency?

A ten-dollar bill backed up by gold held at a bank

M2 is calculated by adding together time deposits, savings deposits, and money market funds.

FALSE

M1 is calculated by adding together time deposits, savings deposits, and M2 money supply.

FALSE M1 = coins and currency in circulation + checkable (demand) deposit + traveler's checks. M2 = M1 + savings deposits + money market funds + certificates of deposit + other time deposits.

Which of the following is part of M1? I. currency in a bank's vault II. cash in your wallet III. checkable deposits IV. traveler's checks

II, III, and IV

Which of the following help to define the function of money.

It serves as a medium of exchange. It serves as a unit of account.

_____ is a measure of how quickly a financial asset can be used.

Liquidity

M2 is calculated by adding together time deposits, savings deposits, and ___________.

M1 money supply money market mutual funds

Which description best fits the definition of M2 money supply?

M2 money supply is the money supply that includes currency, checking accounts in banks, traveler's checks, savings deposits, money market funds, and certificates of deposit.

Which function of money means "a consistent means of measuring the value of things"?

Money serves as a unit of account.

Which of the following components are used to calculate M2?

Savings accounts Currency Traveler's checks M2 money supply includes those monies that are very liquid such as cash, checkable (demand) deposits, and traveler's checks, otherwise known as M1, and less liquid monies including time deposits, certificates of deposits, and money market funds.

A money market fund can best be described as ____________.

an investment option in which the deposits of many investors are pooled together and invested in a safe way

Which of the following require the depositor to commit to leaving their investment in the bank for a certain period of time in exchange for higher interest rates?

certificate of deposit

A ______ is a bill or other currency whose value is backed up by gold or some other commodity held at a bank.

commodity-backed currency

A purchase using a _______ is considered a short term loan from the lender to you.

credit card

M2 is calculated by adding together time deposits, certificate of deposits, savings deposits, and ___________.

traveler's checks money market mutual funds currency M1 = coins and currency in circulation + checkable (demand) deposit + traveler's checks. M2 = M1 + savings deposits + money market funds + certificates of deposit + other time deposits.

When you make a purchase on a credit card, it is considered a short term loan.

true

Double coincidence of wants occurs in an economy _______.

without money that operates only on trade


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