Lesson 10 Econ 104 Homework

The use of money A) allows for greater specialization B) eliminates the double coincidence of wants C) reduces the transaction costs of exchange D) all of the above

all of the above

Distinguish among​ money, income, and wealth. A) A​ person's money is the currency plus all bank accounts​ owned, income is equal to the earning from work and wealth is equal to the profit from investment. B) A​ person's money is the currency held and the checking account​ balance, income is the earning and wealth is equal to value of assets minus all debts. C) A​ person's money is the currency held and the earning from​ work, income is equal to the bank balance and wealth is equal to the profit from investment. D) A​ person's money is the currency in the​ pocket, income is the earning and wealth is equal to asset value.

A​ person's money is the currency held and the checking account​ balance, income is the earning and wealth is equal to value of assets minus all debts.

What is included in M2 but not M1? A) Checking account deposits at banks B) Money market deposit accounts in banks C) Traveler's checks D) Currency

Money market deposit accounts in banks

Which one of the following is not a function of​ money?

Open market operation

The U.S. dollar can best be described as A) reserve money B) commodity money C) fiat money D) commodity-backed money

fiat money

When sellers are willing to accept money in exchange for goods and​ services, money is acting as a A) unit of account B) medium of exchange C) standard of deferred payments D) store of value

medium of exchange

Which of the following best explains the difference between commodity money and fiat​ money?

Fiat money has no value except as​ money, whereas commodity money has value independent of its use as money.

The Federal Reserve uses two definitions of the money​ supply, M1 and​ M2, because A) M2 satisfies the medium of exchange function of​ money, whereas M1 satisfies the store of value function. B) M2 is a narrow definition focusing more on​ liquidity, whereas M1 is a broader definition of the money supply. C) M2 is also known as cash and cash​ equivalent, whereas M1 represents the standard of deferred payment function. D) M1 is a narrow definition focusing more on​ liquidity, whereas M2 is a broader definition of the money supply.

M1 is a narrow definition focusing more on​ liquidity, whereas M2 is a broader definition of the money supply.

If something si to be considered as money, it has to fulfill

all four functions.

The economic definition of money is: A) any asset that people are generally willing to accept in exchange for goods and services B) anything authorized by the government to be used in an exchange C) anything of value owned by a person or firm D) a good that has intrinsic value

any asset that people are generally willing to accept in exchange for goods and services

Money serves as a standard of deferred payment when A) it can be easily stored and used for transactions in the future B) sellers are willing to accept it in exchange for goods and services C) payments agreed to today but made in the future in are in terms of money D) All of the above.

payments agreed to today but made in the future are in terms of money

Money serves as a unit of account when A) it can be easily stored and used for transactions in the future B) prices of goods and services are stated in terms of money C) sellers are willing to accept it in exchange for goods and services D) all of the above are examples of money serving as a unit of account

prices of goods and services are stated in terms of money

The central bank of a country controls the money supply, which equals the currency held by A) the public B) the public plus their checking account balances C) the public plus their checking and saving account balances D) banks

the public plus their checking account balances.