ECO 302 Week 7 Quiz – Strayer
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Chapter 10 and 11
TRUE/FALSE
1. High
powered money is commodity money like gold and silver.
2. If
households reduce money balances, then their transactions costs go up.
3. If
the money supply grows faster than money demand, then the price level rises.
4. If
the interest rate increases, then the real demand for money also increases.
5. The
neutrality of money means that one time changes in the money supply do not
affect real variables.
6. M1
includes a broader array of deposit accounts than M2 does.
7. In
the Barro model, money and barter can both be used for exchanges.
8. In
the Barro model, households hold money as a long-term store of value.
9. If
the price level doubles, then a household’s nominal demand for money also
doubles.
10. If
the nominal quantity of money supplied does not vary, then the price level will
be countercyclical.
MULTIPLE CHOICE
1. Fiat
money is money that has value because of:
a. its intrinsic value. c. government
decree.
b. it is a commodity. d. all
of the above.
2. Commodity
money is money that has value because:
a. of the intrinsic value of the
commodity. c. the government says so.
b. it is legal tender. d. all
of the above.
3. If
a person holds one dollar and does not lose it,
then as long as the person holds that dollar they will have:
a. the commodity value of the dollar. c. an
interest bearing asset.
b. one dollar in currency. d. all
of the above.
4. High
powered money is:
a. money held by business for investment. c. total
currency in circulation.
b. total currency in circulation plus
depository institutions deposits at the Federal Reserve. d. government bonds held by the public and
depository institutions.
5. A
monetary aggregate is:
a. high powered money. c. money
defined more broadly than currency.
b. commodity money. d. total currency
in circulation plus depository institutions deposits at the Federal
Reserve.
6. US
M1 money includes:
a. currency held by the public. c. traveler’s
checks.
b. checkable deposits. d. all
of the above.
7. US
M1 money includes:
a. savings deposits. c. time
deposits.
b. checkable deposits. d. all
of the above.
8. US
M1 money includes:
a. currency, traveler’s checks and
checkable deposits. c. currency, checkable deposits, savings
deposits.
b. checkable deposits, traveler’s checks
and savings deposits. d. currency, time deposits, checkable
deposits.
9. US
M2 money includes:
a. currency. c. small time
deposits.
b. demand deposits d. all of the
above.
10. US
M2 money includes:
a. currency, time deposits government
bonds. c. checkable deposits, savings deposits, small time deposits.
b. savings deposits, small time
deposits, private bonds. d. retail
money market mutual funds, small time deposits, government bonds.
11. Money
is different from other assets like capital and bonds in that:
a. money does not pay interest. c. capital
and bonds are better long term stores of value.
b. money can be spent for purchases. d. all
of the above.
12. Money
is different from other assets like capital and bonds in that:
a. money does not pay interest. c. money
is a better long term store of value.
b. money has intrinsic value. d. all
of the above.
13. Money
is different from other assets like capital and bonds in that:
a. money pays a higher interest rate. c. money
is a better long term store of value.
b. money can be spent for purchases. d. all
of the above.
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