ECONOMICS: MONEY, BANKING, AND
FINANCIAL MARKETS EXAM SCRIPT WITH
VIEW AHEAD TESTED QUESTIONS AND
DETAILED SOLUTIONS 2026.
⩥ Which of the following statements are consistent with how inflation
affects the three functions of money? Check all that apply.. Answer:
As a unit of account, money might become less useful as rising prices
make comparisons of data from one point in time to another more
difficult.
Money is less useful as a store of value when inflation makes each
dollar worth less.
As a medium of exchange, money will be more in demand as prices
rise because more money will be required to function from day to day.
⩥ Why would a barter economy probably have very few comedians?
Check all that apply.. Answer: People would not specialize as much in
a barter economy as in a money economy.
It might be difficult trading jokes for a variety of other goods (such as
food, clothes, books, and so on).
, Exchange between two parties in a barter economy requires a double
coincidence of wants. Because providers of food, clothing, books, and
the like, will not have the same need for jokes that they have for more
basic staples of life, double coincidences of wants may be difficult for
comedians to find.
⩥ The value of paper money as a medium of exchange depends on:.
Answer: Its general acceptability
⩥ True or False: Money is a means of lowering the transaction costs
of making exchanges.. Answer: True
⩥ True or False: M1 can fall as M2 rises.. Answer: True
M1 Formula = Currency held outside banks + Checkable deposits +
Traveler's checks.
M2 Formula = M1 + Savings deposits (including money market
deposit accounts) + Small-denomination time deposits + Money
market mutual funds (retail).
⩥ True or False: M1 can rise without M2 rising.. Answer: True
⩥ Why isn't a credit card money? Check all that apply.. Answer: A
credit card isn't a store of value.
A credit card isn't a medium of exchange.
FINANCIAL MARKETS EXAM SCRIPT WITH
VIEW AHEAD TESTED QUESTIONS AND
DETAILED SOLUTIONS 2026.
⩥ Which of the following statements are consistent with how inflation
affects the three functions of money? Check all that apply.. Answer:
As a unit of account, money might become less useful as rising prices
make comparisons of data from one point in time to another more
difficult.
Money is less useful as a store of value when inflation makes each
dollar worth less.
As a medium of exchange, money will be more in demand as prices
rise because more money will be required to function from day to day.
⩥ Why would a barter economy probably have very few comedians?
Check all that apply.. Answer: People would not specialize as much in
a barter economy as in a money economy.
It might be difficult trading jokes for a variety of other goods (such as
food, clothes, books, and so on).
, Exchange between two parties in a barter economy requires a double
coincidence of wants. Because providers of food, clothing, books, and
the like, will not have the same need for jokes that they have for more
basic staples of life, double coincidences of wants may be difficult for
comedians to find.
⩥ The value of paper money as a medium of exchange depends on:.
Answer: Its general acceptability
⩥ True or False: Money is a means of lowering the transaction costs
of making exchanges.. Answer: True
⩥ True or False: M1 can fall as M2 rises.. Answer: True
M1 Formula = Currency held outside banks + Checkable deposits +
Traveler's checks.
M2 Formula = M1 + Savings deposits (including money market
deposit accounts) + Small-denomination time deposits + Money
market mutual funds (retail).
⩥ True or False: M1 can rise without M2 rising.. Answer: True
⩥ Why isn't a credit card money? Check all that apply.. Answer: A
credit card isn't a store of value.
A credit card isn't a medium of exchange.
