ECON CH 14 EXAM QUESTIONS WITH
CORRECT ANSWERS
Which of the following are functions of money? - ANSWER Unit of account
Store of value
Medium of exchange
Money is a medium of _____ that is used for buying and selling goods and services. -
ANSWER exchange
Because money is a medium of exchange, society avoids: - ANSWER barter
When people measure the worth of various items in terms of money, money is
performing the function of a what? - ANSWER Unit of account
Money functions primarily as a medium of _____, a unit of _____, and a store of value. -
ANSWER exchange; account
Money enables society to gain which of the following advantages? - ANSWER Human
specialization
Geographic specialization
A unit of account is a function of what? - ANSWER money
Money serves as a store of value that enables people to ______. - ANSWER transfer
purchasing power from the present to the future
True or false: Society can attain a higher degree of specialization without the use of
money than it can with money. - ANSWER False
An asset's ______ is the ease with which it can be converted quickly into the most widely
accepted and easily spent form of money, cash, with little or no loss of purchasing
power. - ANSWER liquidity
Money is a ______ of some item or group of items that is used as a medium of exchange. -
ANSWER stock
When money is used as a yardstick for measuring the relative worth of goods or
services it is functioning as a ______. - ANSWER unit of account
M1 is a component of the U.S. ______. - ANSWER money supply
Money serves as a store of _____ that enables people to transfer purchasing power from
the present to the future. - ANSWER value or wealth
, The ease with which an asset can be converted quickly into cash, with little or no loss of
purchasing power, is called what? - ANSWER Liquidity
Currency in the hands of the public and checkable deposits are components of ______. -
ANSWER M1
Which of the following is a "stock" of some item or group of items that is used as a
medium of exchange? - ANSWER Money
Who issues metal coins? - ANSWER U.S. Treasury
What is the money in the form of currency and checkable deposits in commercial banks
called? - ANSWER M1
Which of the following are components of M1? - ANSWER Checkable deposits
Currency
Which of the following comprise the currency of the United States? - ANSWER Metal
coins
Paper money
Token money consists of _____. - ANSWER bills or coins with face values that exceed
their commodity value
The safety and convenience of ______ has made checkable deposits a large component
of the M1 money supply. - ANSWER checks
True or false: People can convert checkable deposits into paper money and coins on
demand. - ANSWER True
Currency that derives its value from the amount printed on it rather than from the value
of the paper or metal from which it is made is referred to as ______ money. - ANSWER
token
Which of the following characteristics of checks has made checkable deposits a large
component of the M1 money supply? - ANSWER Safety
Convenience
People can convert _____ deposits into paper money and coins on demand. - ANSWER
checkable
Which of the following are direct roles of commercial banks? - ANSWER Make available
a wide variety of loans
Keep money safe until demanded via checks
Accept deposits of households and businesses
CORRECT ANSWERS
Which of the following are functions of money? - ANSWER Unit of account
Store of value
Medium of exchange
Money is a medium of _____ that is used for buying and selling goods and services. -
ANSWER exchange
Because money is a medium of exchange, society avoids: - ANSWER barter
When people measure the worth of various items in terms of money, money is
performing the function of a what? - ANSWER Unit of account
Money functions primarily as a medium of _____, a unit of _____, and a store of value. -
ANSWER exchange; account
Money enables society to gain which of the following advantages? - ANSWER Human
specialization
Geographic specialization
A unit of account is a function of what? - ANSWER money
Money serves as a store of value that enables people to ______. - ANSWER transfer
purchasing power from the present to the future
True or false: Society can attain a higher degree of specialization without the use of
money than it can with money. - ANSWER False
An asset's ______ is the ease with which it can be converted quickly into the most widely
accepted and easily spent form of money, cash, with little or no loss of purchasing
power. - ANSWER liquidity
Money is a ______ of some item or group of items that is used as a medium of exchange. -
ANSWER stock
When money is used as a yardstick for measuring the relative worth of goods or
services it is functioning as a ______. - ANSWER unit of account
M1 is a component of the U.S. ______. - ANSWER money supply
Money serves as a store of _____ that enables people to transfer purchasing power from
the present to the future. - ANSWER value or wealth
, The ease with which an asset can be converted quickly into cash, with little or no loss of
purchasing power, is called what? - ANSWER Liquidity
Currency in the hands of the public and checkable deposits are components of ______. -
ANSWER M1
Which of the following is a "stock" of some item or group of items that is used as a
medium of exchange? - ANSWER Money
Who issues metal coins? - ANSWER U.S. Treasury
What is the money in the form of currency and checkable deposits in commercial banks
called? - ANSWER M1
Which of the following are components of M1? - ANSWER Checkable deposits
Currency
Which of the following comprise the currency of the United States? - ANSWER Metal
coins
Paper money
Token money consists of _____. - ANSWER bills or coins with face values that exceed
their commodity value
The safety and convenience of ______ has made checkable deposits a large component
of the M1 money supply. - ANSWER checks
True or false: People can convert checkable deposits into paper money and coins on
demand. - ANSWER True
Currency that derives its value from the amount printed on it rather than from the value
of the paper or metal from which it is made is referred to as ______ money. - ANSWER
token
Which of the following characteristics of checks has made checkable deposits a large
component of the M1 money supply? - ANSWER Safety
Convenience
People can convert _____ deposits into paper money and coins on demand. - ANSWER
checkable
Which of the following are direct roles of commercial banks? - ANSWER Make available
a wide variety of loans
Keep money safe until demanded via checks
Accept deposits of households and businesses
