Econ ch 3
reduces
Money ________ transaction costs, allowing people to specialize in what they do best
monetary aggregates
measures of the money supply reported by the Bank of Canada are called
fiat money
paper currency decreed by governments as legal tender
currency
paper money and coins is defined as ____
payment system
the method of conducting transactions in the economy is called the______
money
If peanuts serve as a medium of exchange, a unit of account, and a store of value, then peanuts are ________.
rises
If the price level doubles, the value of money ________ due to diminishing returns
45
If 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 economy, then one needs to know ________ prices in order to exchange one good for another.
functions of money
Medium of exchange, unit of account, and store of value area all
transaction costs
________ are the time and resources spent trying to exchange goods and services.
commodity money
A disadvantage of ________ is that it can be very heavy and hard to transport from one place to another.
increases
A fall in the level of prices ________ the value of money
wealth
A person's house is part of her ________.
privacy concerns
An electronic payments system has not completely replaced the paper payments system because of all of the following reasons except ________.
commodity money
As the payments system evolves from barter to a monetary system, ________ is likely to precede the use of paper currency
cheques take longer to process
Compared to an electronic payments system, a payments system based on cheques has the major drawback that ________.
higher
Compared to an economy that uses a medium of exchange, in a barter economy, transaction costs are ________.
unit of account
Dennis notices that jackets are on sale for $99. In this case money is functioning as a ________.
electronic payments
During the past two decades an important characteristic of the modern payments system has been the rapidly increasing use of ________.
standardized
For a commodity to function effectively as money it must be ________,making it easy to ascertain its value
decreases
If an individual moves money from a demand deposit account to a money market mutual fund, M1+ and M2 ________
6
If there are four goods in a barter economy, then one needs to know ________ prices in order to exchange one good for another
n(n-1)/2
In a barter economy the number of prices in an economy with N goods is ________.
1
In the money index used by the Bank of Canada: M = X1 + X2 + ... + Xn, the n monetary components have a weight of________.
flow; stock
Income is a ________ and wealth is a ________.
less liquid
Increasing transactions costs of selling an asset make the asset ________.
medium of exchange
Kevin purchasing concert tickets with his debit card is an example of the ________ function of money.
commodity money
Money made up of precious metals or another valuable commodity is called
medium of exchange
Of money's three functions, the one that distinguishes money from other assets is its function as a ________.
fiat
Paper currency that has been declared legal tender but is not convertible into coins or precious metals is called ________ money.
store of value
Patrick places his pocket change into his savings bank on his desk each evening. By his actions, Patrick indicates that he believes that money is a ________.
money
Since it does not have to be converted into anything else to make purchases, ________ is the most liquid asset.
Chequeable deposits
The M1+ measure of money includes ________.
currency
The components of the M1+ monetary aggregate are chequable deposits plus ________ outside banks
simple sum
The measures of money supply used by the Bank of Canada are ________ indices.
wealth
The total collection of pieces of property that serve to store value is a person's ________.
deciding what is generally accepted in payment for goods and services or in the repayment of debt is difficult to determine
There is no single precise measure of money or the money supply for economists because ________.
money
To an economist, ________ is anything that is generally accepted in payment for goods and services or in the repayment of debt.
double coincidence of wants
When compared to exchange systems that rely on money, disadvantages of the barter system include the requirement of a ________.
efficiency
When economists say that money promotes ________, they mean that money encourages specialization and the division of labour.
unit of account
When money prices are used to facilitate comparisons of value, money is said to function as a ________.
currency
Which of the following is included in both M1+ and M2?
M1+
_____ is the narrowest monetary aggregate that the Bank of Canada reports.
liquidity
________ is the relative ease and speed with which an asset can be converted into a medium of exchange.
cheque
an instruction from you to your bank used to transfer money from your account to someone else's account when she deposits the _____
money
anything that is generally accepted in payment for goods and services or in the repayment of debt is called __
M1
currency and chequable deposits are parts of
hyperinflation
during ________,money no longer functions as a good store of value and people may resort to barter transactions on a much larger scale