Exam 12: Money and the Banking System

A) have to specialize in one area of production.
B) have to rely on gold or silver in order to exchange goods and services.
C) have to resort to barter in order to exchange goods and services.
D) can efficiently obtain goods and services.

Correct Answer

verified

Show Answer

A) paper currency may be exchanged for full-bodied money.
B) the money supply is backed by an equal amount of gold and silver.
C) we have a fiduciary monetary system in which currency has both acceptability and predictability of value.
D) the value of the money varies directly with changes in the price level.

Correct Answer

verified

Show Answer

A) Medium of exchange
B) Unit of accounting
C) Store of value
D) Standard of deferred payment

Correct Answer

verified

Show Answer

A) coins minted by the treasury.
B) chequable deposits.
C) certificates of deposit.
D) Bank of Canada notes.

Correct Answer

verified

Show Answer

A) a person's net worth.
B) money
C) a byproduct of a barter economy.
D) barter.

Correct Answer

verified

Show Answer

Correct Answer

verified

No.A credit card is not a unit of accoun...

View Answer

Show Answer

A) sell shares of stock and buy bonds,but would have no effect on their desire to hold money.
B) get rid of all their money and buy stocks with it.
C) sell their least liquid assets and hold more money in case interest rates go up again.
D) hold a smaller fraction of their wealth in the form of money.

Correct Answer

verified

Show Answer

A) gold.
B) the public's confidence that the assets will continue to serve as money.
C) the intrinsic value of the materials used to make the assets that serve as money.
D) assets owned by the government that are intrinsically valuable.

Correct Answer

verified

Show Answer

A) transactions balances.
B) liquid.
C) currencies.
D) liabilities.

Correct Answer

verified

Show Answer

A) buy shares of stock and buy bonds,but would have no effect on their desire to hold money.
B) get rid of all their money and buy stocks with it.
C) sell their least liquid assets and hold more money in case interest rates go up again.
D) hold a smaller fraction of their wealth in the form of money.

Correct Answer

verified

Show Answer

A) M1+ only.
B) M2+ only.
C) M1 and M2.
D) savings balances only.

Correct Answer

verified

Show Answer

A) they have no other choice.
B) its value is holding better than any other asset.
C) its value is still predictable.
D) it still has some intrinsic value.

Correct Answer

verified

Show Answer

Correct Answer

verified

Money serves as a medium of exchange,whi...

View Answer

Show Answer

A) they are not liabilities of the banks.
B) they sometimes earn an interest income for the depositor.
C) they are generally acceptable in the payment of debt.
D) banks hold currency in their vaults equal to the value of demand deposits.

Correct Answer

verified

Show Answer

A) savings deposits and non-personal notice deposits.
B) M1 plus M2..
C) M1+.
D) M2+.

Correct Answer

verified

Show Answer

A) Chequable deposit
B) Saving deposit
C) American dollar
D) Stock market

Correct Answer

verified

Show Answer

A) They want the unit-of-account function of money and government currencies lack this function in times of war.
B) They want a store of value as well as a medium of exchange since it is uncertain what will happen to the value of local currencies or whether they will be accepted.
C) They think that gold will be a good investment in the future.
D) They want something that can be carried easily in case of flight.

Correct Answer

verified

Show Answer

A) she owes the bank money.
B) the bank owes her money.
C) no one owes anybody anything.The deposit is an asset to both the bank and the person.
D) no one owes anybody anything.The deposit is an asset to the person,but is neither an asset nor a liability to the bank.

Correct Answer

verified

Show Answer