Macro Exam 3

Imagine that Kristy deposits $10,000 of currency into her checking account deposit at Bank A and that the required reserve ratio is 20%.Refer to Scenario 14-2. As a result of Kristy's deposit, Bank A's reserves immediately increase by

$10,000.

Imagine that Kristy deposits $10,000 of currency into her checking account deposit at Bank A and that the required reserve ratio is 20%.Refer to Scenario 14-2. As a result of Kristy's deposit, Bank A's required reserves increase by

$2,000.

You earn $500 a month, currently have $200 in currency, $100 in your checking account, $2,000 in your savings accounts, $3,000 worth of illiquid assets and $1,000 of debt. Using the M1 measure of money, you have

$300, annual income = $6,000, and wealth = $4,300.

If a person takes $100 from his/her piggy bank at home and puts it in his/her savings account, then M1 will ________ and M2 will ________.

decrease; not change

Liquidity is defined as

the ease with which a given asset can be converted to a medium of exchange.

The statement "This Dell laptop costs $1,200" illustrates which function of money?

unit of account

Commodity money

has value independent of its use as money.

Imagine that Kristy deposits $10,000 of currency into her checking account deposit at Bank A and that the required reserve ratio is 20%.Refer to Scenario 14-2. As a result of Kristy's deposit, Bank A's excess reserves increase by $2,000. Correct Answer $8,000. You Answered $10,000. $50,000.

8000

The most liquid measure of money supply is

M1.

In economics, money is defined as

any asset people generally accept in exchange for goods and services.

Which of the following is not counted in M1?

credit card balances

By making exchange ________, money allows for ________ and higher ________.

easier; specialization; productivity

If a person withdraws $500 from his/her savings account and puts it in his/her checking account, then M1 will ________ and M2 will ________.

increase; not change

Fiat money has

little to no intrinsic value and is authorized by the central bank or governmental body.

If a person withdraws $500 from his/her checking account and holds it as currency, then M1 will ________ and M2 will ________.

not change; not change

A car dealer sells you a car today in exchange for money in the future. This illustrates which function of money?

standard of deferred payment

A farm worker gets paid today in money, but plans to spend the money next week. This illustrates which function of money?

store of value

If whole tomatoes were money, which of the following functions of money would be the hardest for tomatoes to satisfy?

store of value