Chapter 14 ECON Sample Quiz

Which of the following defines the "unit of account" function of money?

A common measurement of the relative value of different goods and services

Which of the following is NOT part of the Federal Reserve System?

Council of Economic Advisers

Which of the following is in charge of the buying and selling of government securities by the Fed?

Federal Open Market Committee (FOMC)

Which of these institutions has the responsibility for controlling the money supply?

Federal Reserve System

Which definition of the money supply includes credit cards, or "plastic money"?

M1 & M2

Which of the following defines the "medium of exchange" function of money?

Money that is widely accepted in exchange for goods and services

What establishes the value of fiat money?

Our collective trust and confidence that the central government, which decrees that money cannot be refused as payment for debt

Which of the following is NOT one of the functions of the Federal Reserve?

Printing currency

M1 refers to

all - the most narrowly defined money supply, currency held by the public plus checking account balance, the smallest dollar amount of the money supply definitions

The M1 definition of the money supply consists of

coins and currency in circulation, and checkable deposits

Which of the following is not a store of value?

credit card

Which of the following is NOT part of M1?

credit cards

The major protection against sudden mass attempts to withdraw cash from banks is the

deposit insurance provided by the FDIC

Which of the following is a problem with barter?

individuals' wants must coincide in order for there to be exchange

Which of the following is NOT a characteristic of money?

it is always backed by something of high intrinsic value such as gold or silver

Which of the following is part of the M2 definition of the money supply, but not part of M1?

money market mutual fund shares

The easier it is to convert an asset directly into goods and services without loss, the

more liquid it is

Which of the following items is NOT included when computing M1?

savings accounts

If a society were to use a widely accepted, easily measurable, but highly perishable food product as its money, which of the following functions of money would be most impaired?

store of value

Which of the following defines the "store of value" function of money?

the ability of money to hold value over time