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Chapter 29 The Monetary System TRUE/FALSE 1. In an economy that relies on barter, trade requires a double-coincidence of wants. ANS: T DIF: 1 REF: 29-0 NAT: Analytic LOC: The role of money TOP: Barter MSC: Definitional 2. Joe wants to trade eggs for sausage. Lashonda wants to trade sausage for eggs. Joe and Lashonda have a double-coincidence of wants. ANS: T DIF: 1 REF: 29-0 NAT: Analytic LOC: The role of money TOP: Barter MSC: Definitional 3. The use of money allows trade to be roundabout. ANS: T DIF: 1 REF: 29-0 NAT: Analytic LOC: The role of money TOP: Money | Trade MSC: Definitional 4. Roundabout trade is beneficial for an economy. ANS: T DIF: 1 REF: 29-0 NAT: Analytic LOC: The role of money TOP: Money | Trade MSC: Definitional 5. Money allows people to specialize in what they do best, thereby raising everyones standard of living. ANS: T DIF: 2 REF: 29-0 NAT: Analytic LOC: The role of money TOP: Money MSC: Interpretive 6. When money functions as a unit of account, then it cannot be commodity money. ANS: F DIF: 2 REF: 29-1 NAT: Analytic LOC: The role of money TOP: Money MSC: Interpretive 7. Demand deposits are balances in bank accounts that depositors can access by writing a check. ANS: T DIF: 1 REF: 29-1 NAT: Analytic LOC: The role of money TOP: Demand deposits MSC: Definitional 8. According to economists, a collection of valuable jewels is not money. ANS: T DIF: 2 REF: 29-1 NAT: Analytic LOC: The Study of economics, and the definitions of economics TOP: Money MSC: Interpretive 9. A debit card is more similar to a credit card than to a check. ANS: F DIF: 2 REF: 29-1 NAT: Analytic LOC: The Study of economics, and the definitions of economics TOP: Money MSC: Interpretive 10. Gary's wealth is $1 million. Economists would say that Gary has $1 million worth of money. ANS: F DIF: 1 REF: 29-1 NAT: Analytic LOC: The role of money TOP: Money MSC: Definitional 158 159 Chapter 29 /The Monetary System 11. Marc puts prices on surfboards and skateboards at his sporting goods store. He is using money as a unit of account. ANS: T DIF: 1 REF: 29-1 NAT: Analytic LOC: The role of money TOP: Money MSC: Definitional 12. Sandra routinely uses currency to purchase her groceries. She is using money as a unit of account. ANS: F DIF: 1 REF: 29-1 NAT: Analytic LOC: The role of money TOP: Money MSC: Definitional 13. Bottles of very fine wine are less liquid than demand deposits. ANS: T DIF: 1 REF: 29-1 NAT: Analytic LOC: The role of money TOP: Liquidity MSC: Interpretive 14. U.S. dollars are an example of commodity money and hides used to make trades are an example of fiat money. ANS: F DIF: 1 REF: 29-1 NAT: Analytic LOC: The role of money TOP: Commodity money MSC: Definitional 15. When the Soviet Union began breaking up in the late 1980s, cigarettes began replacing the ruble as the medium of exchange even though the ruble was legal tender. The cigarettes provide an example of fiat money.... View Full Document

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