FNAN 320 EXAM 1 QUESTIONS WITH VERIFIED
ANSWERS
1. Money can be simply defined as _____
a. A medium of exchange with intrinsic value
b. A commonly accepted medium of exchange
c. A stable value of currency
d. Fiat currency that is linked to something with intrinsic value - Answers - b. A
commonly accepted medium of exchange
1. The purchasing power of the US dollar from 1650 to 2020 has:
a. Gradually decreased
b. Gradually increased
c. Increased and decreased over time, but has increased in the last century
d. Increased and decreased over time, but has decreased in the last century - Answers
- d. Increased and decreased over time, but has decreased in the last century
1. Money's value comes from _____
a. Supply and demand
b. The Federal Reserve
c. Its intrinsic value
d. Its ability to be traded in for a commodity like gold or silver - Answers - a. Supply and
demand
1. Rank these in order from most liquid to least liquid: currency, home, stocks, savings
account
a. Currency, savings account, stocks, home
b. Currency, stocks, home, savings account
c. Home, stocks, currency, savings account
d. Currency, home, savings account, stock - Answers - a. Currency, savings account,
stocks, home
1. Menger shows that money emerged from barter economies _______
a. Without intrinsic value
b. With the help of the Rome Empire
c. Without a centralized order
d. Once silver coins were discovered in the Nile River - Answers - c. Without a
centralized order
1. In an attempt to better trade, barters were trying to sell their endowment of goods for
some other good that had greater ______
a. supply
b. marketability
, c. weight
d. value - Answers - b. marketability
1. Which of the following is NOT one of the seven fundamental properties of money?
a. divisibility
b. storability
c. verifiability
d. All of the above are fundamental properties of money - Answers - d. All of the above
are fundamental properties of money
1. Cattle was a "bad" form of money because of which property/properties of money?
a. Scarcity
b. Divisibility
c. storability
d. B & C only
e. All of the above - Answers - d. B & C only
1. The lowering of transactions costs has to do with which of the three "major functions
of money"?
a. Medium of exchange
b. Store of value
c. Unit of account - Answers - a. Medium of exchange
1. The ability to more easily compare costs and revenues for business has to do with
which of the three "major functions of money"?
a. Medium of exchange
b. Store of value
c. Unit of account - Answers - c. Unit of account
1. The ability to provide readily available purchasing power for transactions has to do
with which of the three "major functions of money"?
a. Medium of exchange
b. Store of value
c. Unit of account - Answers - b. Store of value
1. Given the supply and demand for money, what happens to the equilibrium VALUE of
money if demand increases?
a. Increases
b. Decreases
c. Does not change - Answers - a. Increases
1. Given the supply and demand for money, what happens to the equilibrium VALUE of
money if supply increases?
a. Increases
b. Decreases
c. Does not change - Answers - b. Decreases
ANSWERS
1. Money can be simply defined as _____
a. A medium of exchange with intrinsic value
b. A commonly accepted medium of exchange
c. A stable value of currency
d. Fiat currency that is linked to something with intrinsic value - Answers - b. A
commonly accepted medium of exchange
1. The purchasing power of the US dollar from 1650 to 2020 has:
a. Gradually decreased
b. Gradually increased
c. Increased and decreased over time, but has increased in the last century
d. Increased and decreased over time, but has decreased in the last century - Answers
- d. Increased and decreased over time, but has decreased in the last century
1. Money's value comes from _____
a. Supply and demand
b. The Federal Reserve
c. Its intrinsic value
d. Its ability to be traded in for a commodity like gold or silver - Answers - a. Supply and
demand
1. Rank these in order from most liquid to least liquid: currency, home, stocks, savings
account
a. Currency, savings account, stocks, home
b. Currency, stocks, home, savings account
c. Home, stocks, currency, savings account
d. Currency, home, savings account, stock - Answers - a. Currency, savings account,
stocks, home
1. Menger shows that money emerged from barter economies _______
a. Without intrinsic value
b. With the help of the Rome Empire
c. Without a centralized order
d. Once silver coins were discovered in the Nile River - Answers - c. Without a
centralized order
1. In an attempt to better trade, barters were trying to sell their endowment of goods for
some other good that had greater ______
a. supply
b. marketability
, c. weight
d. value - Answers - b. marketability
1. Which of the following is NOT one of the seven fundamental properties of money?
a. divisibility
b. storability
c. verifiability
d. All of the above are fundamental properties of money - Answers - d. All of the above
are fundamental properties of money
1. Cattle was a "bad" form of money because of which property/properties of money?
a. Scarcity
b. Divisibility
c. storability
d. B & C only
e. All of the above - Answers - d. B & C only
1. The lowering of transactions costs has to do with which of the three "major functions
of money"?
a. Medium of exchange
b. Store of value
c. Unit of account - Answers - a. Medium of exchange
1. The ability to more easily compare costs and revenues for business has to do with
which of the three "major functions of money"?
a. Medium of exchange
b. Store of value
c. Unit of account - Answers - c. Unit of account
1. The ability to provide readily available purchasing power for transactions has to do
with which of the three "major functions of money"?
a. Medium of exchange
b. Store of value
c. Unit of account - Answers - b. Store of value
1. Given the supply and demand for money, what happens to the equilibrium VALUE of
money if demand increases?
a. Increases
b. Decreases
c. Does not change - Answers - a. Increases
1. Given the supply and demand for money, what happens to the equilibrium VALUE of
money if supply increases?
a. Increases
b. Decreases
c. Does not change - Answers - b. Decreases
