test 3 - NAME(LAST,rnsD Maxfia,\J . ECONOMTCS 1110 EXAM III...

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ECONOMTCS 1110 EXAM III F'ALL 2O1O VERSION B INSTRUCTIONS: Select the best response to each item and bubble in the corresponding letter on your scantron. Each correct response is worth 3.75 points out of 150 possible points. 1. Currency in the U.S. has value because: 4 the U.S. has no inflation. h. it is backed by gold in government vaults. consumers can convert it to gold at Federal Reserve Banks. people have faith that it is generally accepted in payment for goods and services. *liquidity" of an asset refers to: how well the asset seryes as a store of value. the rate of retum eamed by the holder of the asset. the ease with which the asset may be converted into cash without loss of value. how well the asset serves as a hedge against inflation. Fractional reserve banking is a tenn used to describe a banking system in which: \ individual banks share a fraction of the total funds deposited inthe whole banking system. banks are required to quote interest rates in fractions. banks hold reserves equal to only a fraction of their deposit liabilities. banks hold reserves equal to a multiple of their deposit liabilities; that is, fractional in this case really means multiple. ofthe following statements is false? ln a barter economy, a double coincidence of wants must be met before a trade can be made. There are lower transaction costs of making exchanges in a barter economy than in a money economy. \ Money functions as amedium of exchange, unit of account, and store of value. d. Money is a poor store of value dwing inflationary periods. I 5. If Mrs. Bates moves $1,000 from her checking account into her money malket deposit account: M1 increases and M2 decreases. Ml increases and M2 stays the same. Ml decreases and M2 increases. Ml decreases and M2 stays the same. Which \ G) s2. e4. NAME(LAST,rnsD Maxfia,\J . .kro ru* l06e 28? 2 Using money prices to compare relative values of goods and services represents money functioning as a: (^ unit of account. V store of value. c. medium of exchange. d. none ofthe above. \. @ The \ b. o d. J. \ \ c. @ c6.
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J 7. M2 includes Ml plus all of the following EXCEPT: \ savings deposits. h. money market deposit accounts. @ short-term U.S. govenrment securities. small denomination time deposits. If currency held by the public is $200 billion, which of the following could be true so that the value of M1 is $810 billion? Savings deposits are $200 billion and checkable deposits are $410 billion. Money market deposit accounts are $200 billion, checkable deposits are $400 billioq and taveler's checks are $10 billion. Excess reserves are $200 billion and checkable deposits are $410 billion. Checkable deposits are $600 billion and traveler's checks are $10 billion. of the following is correct?
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This note was uploaded on 12/06/2011 for the course ECON 1110 taught by Professor Heatherklinger during the Fall '08 term at North Texas.

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test 3 - NAME(LAST,rnsD Maxfia,\J . ECONOMTCS 1110 EXAM III...

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