CHAPTER 29 - Chapter29 TheMonetary System 1. Barter...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 29 The Monetary  System 1. Barter exchange tends to be inefficient because a. gold is difficult to transport. b. it limits the time and  effort required  for trade. c. it can be a very time-consuming  process to find a double coincidence of wants. d. a standardized  unit of value can be difficult to find in a primitive economy. ANSWER: c it can be a very time-consuming  process to find a double coincidence of wants. SECTION: 1 OBJECTIVE: 1 2. In order for something  to function well as a medium  of exchange, it must be a. issued  by a central government. b. readily and  widely accepted  in trade. c. backed  by a valuable commodity. d. All of the above are correct. ANSWER: b readily and  widely accepted  in trade. SECTION: 1 OBJECTIVE: 1 3. If a society chooses fiat money as its money form, it a. must guarantee its convertibility into gold. b. must worry about its liquidity. c. cannot make use of a banking  system. d. must worry about controlling its quantity. ANSWER: d must worry about controlling its quantity. SECTION: 1 OBJECTIVE: 1 4. Which of the following  is the most liquid  category of assets? a. large time deposits b. money market mutual  fund  balances c. small time deposits d. demand  deposits ANSWER: d demand  deposits SECTION: 1 OBJECTIVE: 1 5. Fred Jones won  a lottery prize of $1 million. He put  the money in the bank to save it for his  daughter’s college education. For him, money was functioning  primarily as a a. unit of account. b. store of value. c. means of payment. d. type of short-term loan. ANSWER: b store of value. SECTION: 1 OBJECTIVE: 1 171
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
172    Chapter 29/The Monetary System 6. Which of the following  is not included  in the M1 money stock? a. small time deposits. b. demand  deposits. c. travelers’ checks. d. cash in the hands  of the public. ANSWER: a small time deposits. SECTION: 1 OBJECTIVE: 1 7. Given the following  information, what  would  be the values of M1 and  M2? Small time deposits $650 billion Checking deposits $300 billion Savings-type deposits $750 billion Money market mutual  funds $600 billion Travelers’ checks $ 25 billion Large time deposits $600 billion Cash in hand $100 billion a. M1 = $400 billion, M2 = $2,450 billion. b.
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 10/22/2010 for the course BUSINESS BAIU09 taught by Professor Mr.ken during the Spring '10 term at American InterContinental University Dunwoody.

Page1 / 6

CHAPTER 29 - Chapter29 TheMonetary System 1. Barter...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online