Exercise Topic 7 - Topic 7. The Monetary System 1. Barter...

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Topic 7. 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. 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. 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. 4. Which of the following is the most liquid category of assets? a. large time deposits b. money market mutual fund balances Topic 7 - 1 -
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d. demand deposits 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. 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. 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. Topic 7
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Exercise Topic 7 - Topic 7. The Monetary System 1. Barter...

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