Case_macro8c1_Ch10 - .,Chapter 10 The Money Supply and the...

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Unformatted text preview: .,Chapter 10 The Money Supply and the Federal Reserve System Principles of Macroeconomics, Case/Fair, 8e 10.1 An Overview of Money Multiple Choice 1 Money is A . the same as income. B . anything that is generally accepted as a medium of exchange. C . the value of all coins and currency in circulation at any time. D . All of the above Answer : B Any transa ction that involves exchanging one good for another without using money is considered a A . liquidity transaction. B . barter transaction. C . deferred payment. D . token exchange. Answer : B Mike makes excell ent cheesecake and Sue is very good at changing the oil in a car. Sue agrees to change the oil in Mike's car, if he makes her a cheesecake. This is an example of A . legal tender. B . barter. C . commodity money. D . fiat money. Answer : B Which of the following factors causes the barter system to be inefficient? A . Its cost of transaction is too high. B . The cost associated with information search is too high. C . It requires a double coincidence of wants. D . All of the above Answer : D Mary wants to trade piano lessons for ice-skating lessons. Sarah wants to trade ice-skating lessons for piano lessons. Mary and Sarah have A . the basis for a liquidity exchange. B . a double incidence of demand. C . the basis for a double fiat exchange. D . a double coincidence of wants. Answer : D The develo pment of money as a medium of exchange has facilitated the expansion of trade because A . holding money increases people's wealth. B . holding money increases people's income. C . money eliminates the "double coincidence of wants" problem. D . no other mediums of exchange are available. Answer : C When money is used as a medium of exchange A . the need for a barter system diminishes. B . the cost of transactions increases. C . the need for a banking system in the economy decreases. D . it reduces the number of transactions in the economy. Answer : A Dena won $200 in the lottery. She deposits her $200 winnings into a money market fund so that she can use the money next year to help her pay her tuition. This is an example of money serving as a(n) A . unit of account. B . medium of exchange. C . store of value. D . investment good. Answer : C When you pay $10 for chicken you ordered for dinner, you are using money as a(n) A . store of value. B . investment good. C . medium of exchange. D . unit of account. Answer : C...
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This note was uploaded on 04/06/2012 for the course BUSINESS CS204, Eco taught by Professor Mr during the Spring '12 term at American University of Beirut.

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Case_macro8c1_Ch10 - .,Chapter 10 The Money Supply and the...

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