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Chap015 - Chapter 15 The Demand for Money Chapter 15 The...

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Chapter 15 - The Demand for Money Chapter 15 The Demand for Money Multiple Choice Questions 1. Any item can function as a medium of exchange a. As long as the item is easily available B . As long as the item is generally accepted in trade for most goods and services and for repayment of debt c. But only if it is backed by some precious metal d. But only if the item has been issued by the Federal Reserve for use as a medium of exchange e. But only if the Treasury Department has designated that item as a medium of exchange Difficulty: Easy 2. Which of the following functions does money NOT serve? a. As a unit of account b. As a standard of deferred payment C . As a protection against inflation d. As a store of value e. As a medium of exchange Difficulty: Easy 3. The monetary aggregate M2 is defined as Difficulty: Easy 15-1
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Chapter 15 - The Demand for Money 4. Money market deposit accounts (MMDAs) Difficulty: Easy 5. Deposits in passbook savings accounts at an S&L are Difficulty: Easy 6. The introduction of NOW-accounts (interest-earning checking accounts. In 1980 led to a. Transfers from passbook saving deposits into NOW-accounts b. An increase in M1, while leaving M2 unchanged c. A decrease in the income velocity of M1 D . All of the above e. None of the above Difficulty: Easy 7. Which of the following affected the demand for M2? Difficulty: Medium 15-2
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Chapter 15 - The Demand for Money 8. People who expect a very high inflation rate may A . Prefer to hold goods instead of money b. Decrease the speed with which they spend their money, thereby decreasing velocity c. Shift their money from time deposits to demand deposits d. Increase their demand for real money balances in order to be able to purchase higher-priced goods later e. None of the above Difficulty: Easy
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