Econ 203 Final Study Guide
Use the table below to determine autonomous consumption spending. Real Real Disposable Consumption Income Spending ($Billions) ($Billions) $ 0 $ 100 200 280 400 460 600 640 800 820 1,000 1,000 1,200 1,180
B. 100
An upward shift of the consumption function could be caused by a(n) a. increase in the interest rate b. decrease in the interest rate c. decrease in wealth d. increase in the autonomous production e. increase in disposable income
B. decrease in the interest rate
Use the table below to determine the marginal propensity to consume (MPC). Real Real Disposable Consumption Income Spending ($Billions) ($Billions) $ 0 $ 100 200 280 400 460 600 640 800 820 1,000 1,000 1,200 1,180
C. .9
Use the table below to find the marginal propensity to consume. Income Taxes Consumption ($Billions) ($Billions) ($ Billions) $1,000 $600 $400 2,000 600 1,000 3,000 600 1,600
D. 0.6
In the short run, a. spending determines income, but not the other way around b. income determines spending, but not the other way around c. spending determines the interest rate, but not the other way around d. spending determines income, and income determines spending e. spending determines the productivity, and productivity determines spending.
D. Spending determines income, and income determines spending
Disposable income is best defined as a. income adjusted for inflation b. nominal income c. the income remaining after bills have been paid d. income after taxes have been paid and transfers received e. income paid in dollars that are worthless
D. income after taxes have been paid and transfers received
The consumption function shows the relationship between real consumption spending and a. real wealth b. the interest rate c. expectations d. real disposable income e. debt
D. real disposable income
Which of the following is the definition of wealth? a. Real disposable income b. The total value of assets c. Real income d. The value of liabilities minus the value of assets e. The value of assets minus the value of outstanding liabilities.
E. The value of assets minus the value of outstanding liabilities.
The marginal propensity to consume (MPC) is typically a. less than zero or greater than 1.0 b. equal to zero c. equal to 1.0 d. between -1.0 and 1.0 e. between zero and 1.0
E. between zero and 1.0
The short-run macro model is used most often to determine changes in a. nominal output b. net output c. gross output d. financial output e. real output.
E. real output
If the expenditure multiplier is 10 and investment spending decreases by $1,000 billion, what will be the change in GDP? a. -$10,000 b. $2,500 c. $1,000 d. $10,000 e. -$1,000
a. -$10,000
Workers expect inflation to fall from 4% to 1% next year. As a result, this should A) shift the short-run aggregate supply curve to the right. B) shift the short-run aggregate supply curve to the left. C) move the economy up along a stationary short-run aggregate supply curve. D) move the economy down along a stationary short-run aggregate supply curve.
a. Shift the short-run aggregate supply curve to the right
If the Fed sells bonds in an open market operation, which of the following is most likely to occur? a. The equilibrium level of GDP decreases b. The money supply increases c. The interest rate falls d. The aggregate expenditure line shifts upward e. The open market operation is said to be expansionary.
a. The equilibrium level of GDP decreases
A decrease in the price level leads to which of the following sequences? a. The money demand curve shifts leftward, the interest rate drops, the aggregate expenditure line shifts upward, and there is movement downward along the aggregate demand curve. b. The money demand curve shifts rightward, the interest rate increases, the aggregate expenditure line shifts downward, and there is movement upward along the aggregate demand curve. c. The money demand curve shifts leftward, the interest rate drops, the aggregate expenditure line shifts downward, and there is movement upward along the aggregate demand curve. d. The money demand curve shifts rightward, the interest rate increases, the aggregate expenditure line shifts upward, and there is movement downward along the aggregate demand curve. e. The money demand curve shifts leftward, the interest rate drops, the aggregate expenditure line shifts upward, and there is movement upward along the aggregate demand curve.
a. The money demand curve shifts leftward, the interest rate drops, the aggregate expenditure line shifts upward, and there is movement downward along the aggregate demand curve.
Which of the following is the most liquid asset? a. Traveler's checks. b. Savings-type deposits. c. Small time deposits. d. Large time deposits. e. A modern art painting.
a. Traveler's checks
Which of the following would shift the money demand curve to the left? a. A decrease in the price level. b. An increase in the interest rate. c. An increase in the price level. d. An increase in real income. e. None of the above.
a. a decrease in the price level
When money is used to compare the costs of different goods and services, it is functioning as a. a unit of account b. a means of payment c. fiat money d. a store of wealth e. legal tender Figure 13-1
a. a unit of account
As there is a movement upward and leftward along the AD curve, a. aggregate expenditure decreases b. the price level remains constant c. equilibrium GDP increases d. aggregate expenditure increases e. the interest rate falls
a. aggregate expenditure decreases
The Fed's open market operations involve a. buying and selling of government bonds b. changes of the discount rate c. setting the required reserve ratio d. buying and selling corporate bonds e. a policy of last resort used to avert a financial crisis.
a. buying and selling of government bonds
An important function of the Federal Reserve is a. clearing checks b. Collecting deposits from members of the public c. overturning reserve requirements d. controlling the demand for money e. making a large profit
a. clearing checks
In the short-run macro model, if aggregate expenditure is less than GDP, output will a. decline as firms cut production to stop the buildup of inventories b. decline as firms increase their prices to stop the buildup of inventories c. increase as firms increase production to try to stop depletion of inventories d. increase as firms cut their prices to try to stop depletion of inventories e. remain unchanged indefinitely unless government takes action
a. decline as firms cut production to stop the buildup of inventories.
The money demand curve is a. downward sloping b. upward sloping c. horizontal d. vertical e. has an inverted V-shape.
a. downward sloping
Suppose GDP is $4,000 billion and aggregate expenditure is $3,750 billion. Inventories will a. increase by $250 billion b. increase by $375 billion c. increase by $400 billion d. decrease by $250 billion e. decrease by $375 billion
a. increase by $250 billion
A demand shock a. is any event that causes the aggregate demand curve to shift b. is usually caused by a change in the price level c. is usually caused by a change in real GDP d. can be traced back to a shift in the economy's production possibilities frontier e. is generally a good thing for the economy
a. is any event that causes the aggregate demand curve to shift.
What is the difference between actual investment (as defined in GDP) and planned investment? a. Planned investment does not include unplanned inventory changes; actual investment does. b. There is no difference; they are the same. c. Planned investment does not include depreciation; actual investment does. d. Planned investment includes inventories; actual investment does not. e. Planned investment includes depreciation; actual investment does not.
a. planned investment does not include unplanned inventory changes; actual investment does.
The basic problem addressed in economics is a. scarce resources and unlimited wants b. scarce wants and unlimited resources c. cost minimization d. how to manage a financial portfolio e. unlimited time and unlimited potential
a. scarce resources and unlimited wants
If the quantity of money demanded is less than the quantity supplied at a given interest rate, what will happen to restore the market to equilibrium? a. The public will try to buy bonds, the price of bonds will increase, and the interest rate will fall until the equilibrium is attained where the money demand and supply curves intersect. b. The public will try to sell bonds, the price of bonds will decrease, and the interest rate will rise until equilibrium is attained where the money demand and supply curves intersect. c. The public will try to sell bonds, the price of bonds will increase, and the interest rate will fall until equilibrium is attained where the money demand and supply curves intersect. d. The public will try to buy bonds, the price of bonds will increase, and the interest rate will rise until equilibrium is attained where the money demand and supply curves intersect. e. The public will try to buy bonds, the price of bonds will decrease, and the interest rate will fall until equilibrium is attained where the money demand and supply curves intersect.
a. the public will try to buy bonds, the price of bonds will increase, and the interest rate will fall until the equilibrium is attained where the money demand and supply curves intersect.
Why do financial intermediaries aid in the efficient operation of the economy? a. Without them it would be difficult for small savers to lend to large borrowers. b. They lend funds to businesses at a zero interest rate. c. They print currency. d. They regulate the money supply. e. They engage in open market operations.
a. without them it would be difficult for small savers to lend to large borrowers.
If the Federal Reserve wishes to increase the money supply by $30,000 and the reserve requirement ratio is 0.4, how big a purchase of bonds will the Fed need to make? a. $75,000 b. $12,000 c. $1,000 d. $30,000 e. $3,000
b. $12,000
If the Federal Reserve sets a required reserve ratio of 0.2 and a bank has $100 million in loans and $80 million in deposits, what is the level of required reserves for the bank? a. $100 million b. $16 million c. $80 million d. $20 million e. $36 million
b. $16 million
If the expenditure multiplier is 2.5 and investment spending increases by $2,000 billion, what will be the change in GDP? a. $2,000 billion b. $5,000 billion c. $571.4 billion d. $3,500 billion e. $7,000 billion
b. $5,000 billion
Which of the following is not a function of the Federal Reserve System? a. Setting the required reserve ratio b. Establishing the prime lending rate c. Clearing checks d. Regulating banking activity e. Controlling the money supply.
b. Establishing the prime lending rate
In the short-run macro model, if GDP is $5 trillion and aggregate expenditure is $4 trillion, a. GDP will rise because inventories will rise b. GDP will fall because inventories will fall c. GDP will remain the same because this is an equilibrium d. investment will decrease e. the government will have to increase taxes
b. GDP will fall because inventories will fall
Fiat money is a. money with intrinsic value like gold coins. b. anything that serves as a means of payment by government declaration. c. any currency made of paper. d. a tangible asset like a house. e. money that is backed by gold.
b. anything that serves as a means of payment by government declaration
An excess supply of money implies an excess a. supply of corporate stock b. demand for bonds c. supply of bonds d. demand for corporate stock e. demand for goods and services
b. demand for bonds
Where is the interest rate determined in the classical model? a. In the goods market b. In the loanable funds market c. By the federal government d. By the Fed e. Where aggregate expenditure equals GDP.
b. in the loanable funds market
In the short-run macro model, firms that sell more than they produce will respond by a. reducing output b. increasing output c. reducing prices d. raising prices e. not changing production because the market will adjust on its own
b. increasing output
The Federal Reserve a. prints money for use by individuals during transactions. b. is a nation's monetary authority, responsible for controlling the money supply. c. issues government debt. d. makes loans and takes deposits from individuals. e. collects taxes from corporations only while the Treasury Department collects personal income and Social Security taxes.
b. is a nation's monetary authority, responsible for controlling the money supply
A supply shock a. is usually caused by a change in the money supply b. is any event that causes the aggregate supply curve to shift c. is any event caused by a change in the price level d. is usually good news for the economy e. always leads to an increase in the interest rate
b. is any event that causes the aggregate supply curve to shift.
A decrease in the price level will A) shift the short-run aggregate supply curve to the right. B) move the economy down along a stationary short-run aggregate supply curve. C) shift the short-run aggregate supply curve to the left. D) move the economy up along a stationary short-run aggregate supply curve.
b. move the economy down along a stationary short-run aggregate supply curve
Which of the following is the least liquid asset? a. checkable deposits. b. savings-type deposits. c. traveler's checks. d. demand deposits. e. cash.
b. savings-type deposits.
The demand for curve for money a. shows the amount of money people actually hold b. shows the amount of money people would like to hold, given the constraints they face c. shifts if the interest rate changes d. is independent of the price level e. changes whenever the Fed changes the money supply.
b. shows the amount of money people would like to hold, given the constraints they face
Financial intermediaries a. harm both borrowers and lenders because they pay lenders a lower rate of interest than they charge to borrowers b. specialize in assembling loanable funds from households and firms, and channeling those funds to other households, firms, and government agencies c. are all depository institutions d. increase the risk of lending and borrowing because a financial intermediary has nothing to lose from such transactions e. reduce efficiency because they add an extra step to many financial transactions
b. specialize in assembling loanable funds from households and firms, and channeling those funds to other households, firms, and government agencies.
If the quantity of money demanded exceeds the quantity of money supplied at a given interest rate, what will happen to restore the market to equilibrium? a. The public will try to buy bonds, the price of bonds will increase, and the interest rate will fall until equilibrium is attained where the money demand and supply curves intersect at the market interest rate. b. The public will try to sell bonds, the price of bonds will decrease, and the interest rate will rise until equilibrium is attained where the money demand and supply curves intersect at the market interest rate. c. The public will try to sell bonds, the price of bonds will increase, and the interest rate will fall until equilibrium is attained where the money demand and supply curves intersect. d. The public will try to buy bonds, the price of bonds will increase, and the interest rate will rise until equilibrium is attained where the money demand and supply curves intersect. e. The public will try to buy bonds, the price of bonds will decrease, and the interest rate will fall until equilibrium is attained where the money demand and supply curves intersect.
b. the public will try to sell bonds, the price of bonds will decrease, and the interest rate will rise until equilibrium is attained where the money demand and supply curves intersect at the market interest rate.
If there is an excess supply of money in the economy, a. there is also an excess demand for money b. there is also an excess demand for bonds c. there is also an excess supply of bonds d. the interest rate will rise e. the Fed must intervene to restore equilibrium
b. there is also an excess demand for bonds
If the reserve requirement is 0.2 and demand deposits are $800 (assume no earlier loans), the banks can lend out a. $800 b. $80 c. $640 d. $160 e. $960.
c. $640
If the required reserve ratio is 0.2, what is the demand deposit multiplier? a. 10.0 b. 0.4 c. 5.0 d. 2.5 e. 1.67
c. 5.0
Which of the following would not cause the AD curve to shift? a. A change in the money supply b. The public's expectations of a fall in the interest rate c. A change in aggregate expenditure caused by a change in the price level d. A change in fiscal policy e. A change in autonomous consumption spending.
c. A change in aggregate expenditure caused by a change in the price level
Which of the following would cause the aggregate demand curve to shift to the right? a. An increase in the price level b. A decrease in the price level c. An increase in government purchases d. An increase in taxes e. An increase in the interest rate.
c. An increase in government purchases
If investment spending decreases by $500 billion and if MPC = 0.6, a. equilibrium GDP will rise by $1,250 billion b. equilibrium GDP will fall by $500 billion c. equilibrium GDP will fall by $1,250 billion d. equilibrium GDP will rise by $500 billion e. nothing will happen in the short run
c. Equilibrium GDP will fall by $1,250 billion
A movement along the AD curve down and to the right is caused by a. a rightward shift of the money demand curve b. falling consumer confidence c. a decreasing price level d. expansionary open market transactions by the Fed e. a stable price level and increases in consumption, investment, or government spending
c. a decreasing price level
Equilibrium GDP is reached when a. aggregate expenditure exceeds GDP b. aggregate expenditure is less than GDP c. aggregate expenditure equals the level of output d. the level of output is greater than aggregate expenditure e. the level of output is less than aggregate expenditure
c. aggregate expenditure equals the level of output
Money is a. only assets such as gold and silver b. only fiat in nature c. anything that is generally accepted as a means of payment d. acceptable as a means of payment because the government guarantees that it must be e. only those things backed by gold
c. anything that is generally accepted as a means of payment
The aggregate demand curve a. represents the relationship between prices and quantities of all goods produced in an economy b. is derived from equilibrium conditions in the labor and money markets c. gives the equilibrium level of real GDP corresponding to a given price level d. is the sum of an economy's individual demand curves e. plots the interest rate as a function of output
c. gives the equilibrium level of real GDP corresponding to a given price level
If aggregate expenditure is less than GDP, inventories will a. grow and prices will fall b. grow and GDP will rise c. grow and GDP will fall d. shrink and GDP will rise e. shrink and GDP will fall
c. grow and GDP will fall
The primary reason that U.S. money has value is that it a. is backed by gold b. is fiat money c. is accepted by others in exchange for goods and services d. is commodity money e. has a fixed value established by the Federal Reserve.
c. is accepted by others in exchange for goods and services.
From where do most of a bank's profit come? a. Issuing currency. b. Subsidies from the Federal Reserve. c. Lending out funds and charging interest. d. Buying and selling bonds. e. Selling mutual fund shares.
c. lending out funds and charging interest
Commercial banks can increase the money supply by a. accepting demand deposits b. loaning out required reserves c. loaning out excess reserves d. selling bonds to the public e. buying bonds from the Fed
c. loaning out excess reserves
If the interest rate increases, the money demand curve a. shifts to the right. b. shifts to the left. c. neither shifts nor changes slope. d. gets steeper. e. becomes horizontal.
c. neither shifts nor changes slope.
Stocks and bonds are a. financial assets; therefore, they are considered to be money b. highly-liquid financial assets; therefore, they are considered to be money c. not highly-liquid financial assets; therefore, they are not considered to be money d. widely accepted means of payment; therefore, they are considered to be money e. not financial assets; therefore, they are not considered to be money
c. not highly-liquid financial assets; therefore, they are not considered to be money
Which of the following could not serve as commodity money? a. diamond b. gold c. paper d. fur e. silver
c. paper
If the actual interest rate is below the equilibrium interest rate, the a. Fed must intervene in financial markets to restore the interest rate to its equilibrium value b. price of bonds will increase c. price of bonds will decrease d. money supply will increase until the interest rate rises e. money supply will decrease until the interest rate rises
c. price of bonds will decrease
The Fed can decrease the money supply by a. decreasing the reserve requirement b. making open market purchases of bonds c. selling government bonds d. destroying printed currency e. creating wealth
c. selling government bonds
Open market sales of bonds by the Federal Reserve drain reserves from the banking system and shift a. the allocation of wealth between bonds and stocks b. the economy toward a trough in the business cycle c. the money supply curve leftward d. reserves to nonmember banks e. the demand for money curve leftward
c. the money supply curve leftward
Equilibrium in the money market means that the quantity of money people are holding equals a. their entire wealth b. their entire income c. the quantity of money that they want to hold d. the money supply e. the value of bonds in their financial portfolios
c. the quantity of money they want to hold
All the problems studied in economics arise from a. the unequal distribution of income b. overpopulation c. the scarcity of resources d. inappropriate government action e. War
c. the scarcity of resources
Which of the following is not a reason why the wages of workers and the prices of inputs rise more slowly than the prices of final goods and services? A) Firms are often slow to adjust wages. B) Menu costs make some prices sticky. C) Unions are successful in pushing up wages. D) Contracts make prices and wages "sticky."
c. unions are successful in pushing up wages.
If the total amount of demand deposits in the country increases by $12,000 after the Fed purchases $6,000 in bonds, what is the required reserve ratio? a. 0.4 b. 0.1 c. 0.2 d. 0.5 e. 0.3
d. 0.5
If the marginal propensity to consume is 0.7, the expenditure multiplier is a. 7.0 b. 0.7 c. 3.0 d. 3.3 e. not determinable without additional information.
d. 3.3
If the marginal propensity to consume is 0.8, what is the value of the expenditure multiplier? a. 0.2 b. 0.8 c. 1.25 d. 5.0 e. 8.0
d. 5.0
Which of the following would lead to a rightward shift of the money demand curve? a. A decrease in the price level b. A decrease in output c. An open market sale of bonds by the Fed d. An increase in the price level e. An open market purchase of bonds by the Fed.
d. An increase in the price level
Banks can create a. Income b. Power c. Wealth d. Money e. capital stock
d. Money
When economists speak of the demand for money, they refer to the amount of money people would like to hold a. given that it can only be printed slowly b. in the best of all possible worlds c. in their bank accounts rather than their wallets d. at each interest rate e. rather than spend.
d. at each interest rate
The Fed sometimes acts as a lender of last resort. This means that a. individuals can borrow from the Fed when the President declares a national disaster b. individuals can try to borrow money from the Fed if they are unable to borrow from a bank c. banks can always go to the Fed for reserves in order to purchase more government bonds d. banks can always go to the Fed for reserves to meet their obligations to depositors e. business firms can try to borrow money from the Fed they are unable to borrow from a bank
d. banks can always go to the Fed for reserves to meet their obligations to depositors.
Which of the following will the Federal Reserve do in order to increase the money supply? a. sell government bonds b. buy corporate bonds c. sell common stock d. buy government bonds e. increase the salaries of its governors.
d. buy government bonds
Gold, silver and furs, when used as money, are referred to as a. fiat money b. precious money c. paper currency d. commodity money e. exchange money
d. commodity money
If the Fed conducts an open market purchase of bonds, the a. money supply decreases as reserves are injected into the banking system b. demand for money increases as reserves are drained from the banking system c. demand for money decreases as reserves are injected into the banking system d. money supply increases as reserves are injected into the banking system e. money supply increases as reserves are drained from the banking system
d. money supply increases as reserves are injected into the banking system.
The demand for money a. is the same as the demand for bonds b. is the same as the supply of bonds c. increases whenever the price level falls d. reflects the constraints that people face e. shows the people always demand as much money as possible
d. reflects the constraints that people face
Which of the following is included in the M2 money stock? a. bonds b. stocks c. gold d. savings-type accounts e. credit card balances
d. savings-type accounts
If the price level increases, the money demand curve will a. shift leftward b. become steeper c. remain in the same position; however, there will be movement upward along the curve d. shift rightward e. remain in the same position; however, there will be movement downward along the curve
d. shift rightward
Aggregate expenditure is the sum of a. all types of spending by households and firms b. spending and savings by households c. spending by households and governments on final goods and services d. spending by households, government, firms, and foreigners on final goods and services e. all spending and saving by households, firms, and governments
d. spending by households, government, firms, and foreigners on final goods and services
The organization responsible for creating and regulating the U.S. money supply is a. the Department of Commerce b. the Council of Economic Advisers c. the U.S. Mint d. the Federal Reserve System e. the Department of the Treasury
d. the Federal Reserve System
The money supply curve is vertical because a. real income does not influence the quantity of money supplied b. the price level does not influence the level of spending c. only the interest rate influences the quantity of money supplied d. the Federal Reserve sets the money supply e. nominal income does not influence the quantity of money supplied
d. the Federal Reserve sets the money supply
The opportunity cost of holding money is a. the dollar cost necessary to change other assets into money b. the time cost of accessing funds c. the value of the goods and services a person is able to obtain with the money d. the interest a person could have earned by holding other forms of wealth instead e. zero, because opportunity costs only apply to real assets, goods and services.
d. the interest a person could have earned by holding other forms of wealth instead
If the price of bonds rises, a. the Fed will decrease the money supply b. the Fed will increase the money supply c. the interest rate will rise d. the interest rate will fall e. inflation must be accelerating
d. the interest rate will fall
Reserves are defined as a. the total cash in bank vaults b. money deposited in Federal Reserve accounts c. the sum of vault cash and deposits at Federal Reserve banks d. the total amount of money a bank must hold e. ten percent of demand deposit liabilities
d. the total amount of money a bank must hold
Assuming that households do not change their cash holdings and banks loan out all of their excess reserves, if the required reserve ratio (RRR) is 10 percent and the Fed purchases $2,000 worth of bonds from banks, how much money will be eventually created? a. $1,800 b. $2,000 c. $9,000 d. $18,000 e. $20,000
e. $20,000
If the expenditure multiplier is 3.5 and investment spending increases by $2,000 billion, what will be the change in GDP? a. $2,000 billion b. $5,000 billion c. $571.4 billion d. $3,500 billion e. $7,000 billion
e. $7,000 billion
If the marginal propensity to consume is 0.75 and investment spending increases by $200 billion, by how much will equilibrium output increase? a. $350 billion b. $150 billion c. $200 billion d. $266.7 billion e. $800 billion
e. $800 billion
Use the graph shown in Figure 11-5 to determine equilibrium in the economy. a. $1,000 b. $2,000 c. $3,000 d. $3,250 e. There is no equilibrium in this economy
e. There is no equilibrium in this economy
In the short-run macro model, what is the relationship between income and government purchases? a. It is positive and stable. b. It is positive but unstable. c. It is negative and stable. d. It is negative but unstable. e. There is no relationship between the two variables.
e. There is no relationship between the two variables
Which of the following is an open market purchase? a. When private individuals sell government bonds b. When the Fed sells government bonds c. When private individuals purchase government bonds d. When bond dealers buy government bonds from the fed e. When the Fed buys government bonds.
e. When the Fed buys government bonds.
If the Fed increased the discount rate, a. banks would make more loans b. the money supply would increase c. firms would be more likely to seek out loans d. the required reserve ratio would increase e. banks would make fewer loans
e. banks would make fewer loans
The Fed typically increases the money supply by a. selling government bonds b. buying government loans c. selling government loans d. printing more currency e. buying government bonds
e. buying government bonds
If there is an excess supply of money, there is an excess a. demand for bonds and the price of bonds will decrease b. supply of bonds and the price of bonds will decrease c. supply of bonds but the price of bonds will not change d. supply of bonds and the price of bonds will increase e. demand for bonds and the price of bonds will increase
e. demand for bonds and the price of bonds will increase
The graph shown in Figure 11-4 shows a. equilibrium in the short-run macro model b. when inventories will accumulate and when they will shrink c. how an increase in GDP will increase government tax revenues d. how an increase in aggregate expenditure will increase GDP e. every point at which aggregate expenditure equals GDP
e. every point at which aggregate expenditure equals GDP
The Federal Reserve System is under the strict control of a. the executive branch b. the legislative branch c. the judicial branch d. the International Monetary Fund e. none of the above
e. none of the above
A bank's balance sheet shows a. information about the riskiness of its loans b. the amount of money loaned to each individual borrower c. the amount of cash in the hands of the public d. the number of checking accounts it maintains e. the bank's assets and liabilities
e. the bank's assets and liabilities
Which of the following is the most liquid form of asset? a. Small time deposits b. Large time deposits c. Savings accounts d. Money market mutual fund (MMMF) balances e. Travelers' checks.
e. travelers' checks
If the government passed a law designating sea shells as money, sea shells a. would not be legal tender b. would not function as money because they would be unable to serve as a unit of account c. would not function as money because they would be unable to serve as a means of payment d. would not function as money because they would be unable to serve as a store of wealth e. would function as money as long as they were accepted in exchange for goods and services
e. would function as money as long as they were accepted in exchange for goods and services.
