Assignment 16

Currency in circulation: $500 Money Market Funds: 550 Time Deposits: 800 Saving Deposits: 1110 Checkable bank deposits: 380 Traveler's checks: 15 American Express gift cards: 25 The value of M1 is: A. $895 billion. B. $920 billion. C. $880 billion. D. $2005 billion.

A. $895 billion.

Which of the following assets is the MOST liquid? A. a $50 bill B. 100 shares of Microsoft stock C. a $50 Amazon.com gift certificate D. an economics textbook

A. a $50 bill

Money that the government has ordered to be accepted as money is: A. fiat money. B. currency. C. convertible paper money. D. commodity money.

A. fiat money.

If currency in circulation is $100 million, demand deposits are $500, savings deposits are $300 million and travelers' checks are $10 million, then the M1 money supply is: A. $100 million. B. $610 million. C. $900 million. D. $410 million.

B. $610 million.

If you transfer $1,000 from your savings account to your checking account: A. M1 increases by $1,000, and M2 decreases by $1,000. B. M1 increases by $1,000, but M2 doesn't change. C. M1 decreases by $1,000, and M2 increases by $1,000. D. M1 and M2 don't change.

B. M1 increases by $1,000, but M2 doesn't change.

Which of the following would NOT fit the economist's definition of money? A. currency B. bonds C. checkable bank deposits D. coins

B. bonds

Which of the following combination of assets are considered to be money? A. currency in circulation, checkable bank deposits, and credit cards B. currency in circulation, checkable bank deposits, and travelers' checks C. currency in circulation and in bank vaults, checkable bank deposits, and travelers' checks D. currency in circulation and in bank vaults, checkable bank deposits, and credit cards

B. currency in circulation, checkable bank deposits, and travelers' checks

The double coincidence of wants problem can be solved by: A. more resources. B. money. C. more production. D. economic growth.

B. money.

"Tuition at State University this year is $8,000." Which function of money does this statement best illustrate? A. store of value B. unit of account C. medium of exchange D. means of deferred payment

B. unit of account

Currency in circulation: $500 Money Market Funds: 550 Time Deposits: 800 Saving Deposits: 1110 Checkable bank deposits: 380 Traveler's checks: 15 American Express gift cards: 25 Consider the information in the table. M2 should be: A. $2805 billion. B. $3340 billion. C. $3355 billion. D. $2005 billion.

C. $3355 billion.

The monetary aggregates from most liquid to least liquid are: A. M3, M2, and M1. B. M3, M1, and M2. C. M1, M2, and M3. D. M2, M3, and M1.

C. M1, M2, and M3.

Which of the following financial assets belongs to M2, but not to M1? A. a checkable deposit B. currency C. a savings account D. travelers' checks

C. a savings account

The narrowest definition of money excludes: A. currency in circulation. B. checkable bank deposits. C. currency in the vault at the bank. D. traveler's checks.

C. currency in the vault at the bank.

Money is anything that: A. can be converted into silver with relatively little loss in value. B. that is traded in the stock market. C. serves as a medium of exchange for goods and services. D. can be converted into gold with relatively little loss in value.

C. serves as a medium of exchange for goods and services.

Currency in circulation: $100 Checkable deposits: 300 Travelers checks: 50 Small-Denomination time deposits: 700 Saving Deposits: 75 Money Market mutual funds (individuals): 500 Large-denomination time deposits: 200 The money supply measured by M1 is: A. $325 billion. B. $1,875 billion. C. $1,425 billion. D. $450 billion.

D. $450 billion.

The primary difference between M1 and M2 is that: A. the dollar amount of M1 is much larger than the dollar amount of M2. B. M2 includes checkable deposits, but M1 does not. C. M1 includes checkable deposits, but M2 does not. D. M2 includes savings deposits and time deposits, but M1 does not.

D. M2 includes savings deposits and time deposits, but M1 does not.

Which of the following is part of M1? A. shares of corporate stock B. short-term certificates of deposit (CDs) C. money market fund account balances D. currency in a person's purse

D. currency in a person's purse

Suppose a group of people decided to create their own economic system with cartons of milk serving as money. If we decided to use this "liquid asset" as our medium of exchange, and all prices were measured in cartons of milk, milk would still not be a good form of money because it would not be a good ________. A. unit of account B. near-money C. medium of exchange D. store of value

D. store of value

The functions of money are: A. expander of economic activity, medium of exchange, and store of value. B. store of value, medium of exchange, and determinant of investment. C. medium of exchange, store of value, and factor of production. D. store of value, unit of account, and medium of exchange.

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

Suppose you find a $50 bill that you put in a coat pocket last winter. If you deposit it in your checking account: A. M1 increases by $50. B. M1 and M2 both increase by $50. C. M2 increases by $50. D. there is no change in M1 or M2.

D. there is no change in M1 or M2.