CLEMSON ECON 2120 FINAL EXAM
QUESTIONS AND ANSWERS
Money - ans- sq sq
is any commodity (such as gold) or token ($10) that is generally accepted as means of p
sq sq sq sq sq sq sq sq sq sq sq sq sq sq sq sq
ayment
Commodity or Token - ans- sq sq sq sq
money is something that can be recognized, and can be divided up into small parts.
sq sq sq sq sq sq sq sq sq sq sq sq sq sq
Means of Payment - ans- sq sq sq sq
is a method of settling a debt. You can buy a car with a loan and pay the loan in the due
sq sq sq sq sq sq sq sq sq sq sq sq sq sq sq sq sq sq sq sq sq sq
date. Money is used to pay off the loan.
sq sq sq sq sq sq sq sq
Money performs three vital functions - ans-
sq sq sq sq sq sq
medium of exchange, unit of account, store of value
sq sq sq sq sq sq sq sq
Medium of exchange - ans- sq sq sq sq
is an object that is generally accepted in return for goods and services.
sq sq sq sq sq sq sq sq sq sq sq sq
Barter - ans- sq sq
without money, you would have to exchange goods and services directly for other goods
sq sq sq sq sq sq sq sq sq sq sq sq sq s
and services and exchange.
q sq sq sq
Unit of Account - ans-Is an agreed-
sq sq sq sq sq sq
upon measure for stating the prices of goods and services.
sq sq sq sq sq sq sq sq sq
Fiat money - ans-
sq sq sq
is objects that are money because the law decrees or orders them to be money.
sq sq sq sq sq sq sq sq sq sq sq sq sq sq
The objects that we use as money today are - ans-
sq sq sq sq sq sq sq sq sq sq
currency; deposits at banks and other financial institutions
sq sq sq sq sq sq sq
Currency - ans-The notes (dollar bills) and coins that we use in the United States today
sq sq sq sq sq sq sq sq sq sq sq sq sq sq sq
Deposits - ans- sq sq
are money because they can be converted into currency on demand and are used direct
sq sq sq sq sq sq sq sq sq sq sq sq sq sq
ly to make payments.
sq sq sq
, Currency inside the banks is not money - ans- sq sq sq sq sq sq sq sq
when you get some cash from the ATM, you convert your bank deposit into currency.
sq sq sq sq sq sq sq sq sq sq sq sq sq sq
Official Measure of Money:M1 - ans- sq sq sq sq sq
consists of currency by individuals and businesses, traveler's checks, and checkable de
sq sq sq sq sq sq sq sq sq sq sq
posits owned by individuals and businesses.
sq sq sq sq sq
Official Measure of Money:M2 - ans- sq sq sq sq sq
consists of M1 plus savings deposits and small time deposits, money market funds, and
sq sq sq sq sq sq sq sq sq sq sq sq sq sq
other deposits.consists of M1 plus savings deposits and small time deposits, money mar
sq sq sq sq sq sq sq sq sq sq sq sq
ket funds, and other deposits.
sq sq sq sq
A money market fund - ans-(also known as money market mutual fund) is an open-
sq sq sq sq sq sq sq sq sq sq sq sq sq sq
ended mutual fund that invests in short-
sq sq sq sq sq sq
term debt securities. An investment fund that holds the objective to earn interest for shar
sq sq sq sq sq sq sq sq sq sq sq sq sq sq
eholders while maintaining a net asset value (NAV) of $1 per share.
sq sq sq sq sq sq sq sq sq sq sq
What is money market funds purpose? - ans-
sq sq sq sq sq sq sq
is to provide investors with a safe place to invest easily accessible cash-
sq sq sq sq sq sq sq sq sq sq sq sq
equivalent assets characterized as a low-risk, low-return investment.
sq sq sq sq sq sq sq
Time deposit - ans- sq sq sq
A bank deposit that cannot be withdrawn before a date specified at the time of deposit.
sq sq sq sq sq sq sq sq sq sq sq sq sq sq sq
M1 - ans-• Currency and traveler's checks
sq sq sq sq sq sq
• Checkable deposits
sq sq
M2 - ans-M1sq sq
Savings deposits sq
Small time deposits sq sq
Money market funds and other deposits
sq sq sq sq sq
Are M1 and M2 Means of Payment? - ans-
sq sq sq sq sq sq sq sq
The test of whether something is money is whether it is generally accepted as a means
sq sq sq sq sq sq sq sq sq sq sq sq sq sq sq sq
of payment.
sq
M1 passes this test and is money.
sq sq sq sq sq sq
Some savings deposits in M2 are just as much a means of payment as the checkable de
sq sq sq sq sq sq sq sq sq sq sq sq sq sq sq sq
posits in M1. sq sq
Checks - ans-Not money. It is an instruction to a bank to make a payment
sq sq sq sq sq sq sq sq sq sq sq sq sq sq
Credit Cards - ans-is not money becuse it does not make a payment
sq sq sq sq sq sq sq sq sq sq sq sq
Debit Cards - ans-Not money. It is like an electronic check.
sq sq sq sq sq sq sq sq sq sq
Mobile Wallet - ans-is an electronic version of a physical wallet.
sq sq sq sq sq sq sq sq sq sq
QUESTIONS AND ANSWERS
Money - ans- sq sq
is any commodity (such as gold) or token ($10) that is generally accepted as means of p
sq sq sq sq sq sq sq sq sq sq sq sq sq sq sq sq
ayment
Commodity or Token - ans- sq sq sq sq
money is something that can be recognized, and can be divided up into small parts.
sq sq sq sq sq sq sq sq sq sq sq sq sq sq
Means of Payment - ans- sq sq sq sq
is a method of settling a debt. You can buy a car with a loan and pay the loan in the due
sq sq sq sq sq sq sq sq sq sq sq sq sq sq sq sq sq sq sq sq sq sq
date. Money is used to pay off the loan.
sq sq sq sq sq sq sq sq
Money performs three vital functions - ans-
sq sq sq sq sq sq
medium of exchange, unit of account, store of value
sq sq sq sq sq sq sq sq
Medium of exchange - ans- sq sq sq sq
is an object that is generally accepted in return for goods and services.
sq sq sq sq sq sq sq sq sq sq sq sq
Barter - ans- sq sq
without money, you would have to exchange goods and services directly for other goods
sq sq sq sq sq sq sq sq sq sq sq sq sq s
and services and exchange.
q sq sq sq
Unit of Account - ans-Is an agreed-
sq sq sq sq sq sq
upon measure for stating the prices of goods and services.
sq sq sq sq sq sq sq sq sq
Fiat money - ans-
sq sq sq
is objects that are money because the law decrees or orders them to be money.
sq sq sq sq sq sq sq sq sq sq sq sq sq sq
The objects that we use as money today are - ans-
sq sq sq sq sq sq sq sq sq sq
currency; deposits at banks and other financial institutions
sq sq sq sq sq sq sq
Currency - ans-The notes (dollar bills) and coins that we use in the United States today
sq sq sq sq sq sq sq sq sq sq sq sq sq sq sq
Deposits - ans- sq sq
are money because they can be converted into currency on demand and are used direct
sq sq sq sq sq sq sq sq sq sq sq sq sq sq
ly to make payments.
sq sq sq
, Currency inside the banks is not money - ans- sq sq sq sq sq sq sq sq
when you get some cash from the ATM, you convert your bank deposit into currency.
sq sq sq sq sq sq sq sq sq sq sq sq sq sq
Official Measure of Money:M1 - ans- sq sq sq sq sq
consists of currency by individuals and businesses, traveler's checks, and checkable de
sq sq sq sq sq sq sq sq sq sq sq
posits owned by individuals and businesses.
sq sq sq sq sq
Official Measure of Money:M2 - ans- sq sq sq sq sq
consists of M1 plus savings deposits and small time deposits, money market funds, and
sq sq sq sq sq sq sq sq sq sq sq sq sq sq
other deposits.consists of M1 plus savings deposits and small time deposits, money mar
sq sq sq sq sq sq sq sq sq sq sq sq
ket funds, and other deposits.
sq sq sq sq
A money market fund - ans-(also known as money market mutual fund) is an open-
sq sq sq sq sq sq sq sq sq sq sq sq sq sq
ended mutual fund that invests in short-
sq sq sq sq sq sq
term debt securities. An investment fund that holds the objective to earn interest for shar
sq sq sq sq sq sq sq sq sq sq sq sq sq sq
eholders while maintaining a net asset value (NAV) of $1 per share.
sq sq sq sq sq sq sq sq sq sq sq
What is money market funds purpose? - ans-
sq sq sq sq sq sq sq
is to provide investors with a safe place to invest easily accessible cash-
sq sq sq sq sq sq sq sq sq sq sq sq
equivalent assets characterized as a low-risk, low-return investment.
sq sq sq sq sq sq sq
Time deposit - ans- sq sq sq
A bank deposit that cannot be withdrawn before a date specified at the time of deposit.
sq sq sq sq sq sq sq sq sq sq sq sq sq sq sq
M1 - ans-• Currency and traveler's checks
sq sq sq sq sq sq
• Checkable deposits
sq sq
M2 - ans-M1sq sq
Savings deposits sq
Small time deposits sq sq
Money market funds and other deposits
sq sq sq sq sq
Are M1 and M2 Means of Payment? - ans-
sq sq sq sq sq sq sq sq
The test of whether something is money is whether it is generally accepted as a means
sq sq sq sq sq sq sq sq sq sq sq sq sq sq sq sq
of payment.
sq
M1 passes this test and is money.
sq sq sq sq sq sq
Some savings deposits in M2 are just as much a means of payment as the checkable de
sq sq sq sq sq sq sq sq sq sq sq sq sq sq sq sq
posits in M1. sq sq
Checks - ans-Not money. It is an instruction to a bank to make a payment
sq sq sq sq sq sq sq sq sq sq sq sq sq sq
Credit Cards - ans-is not money becuse it does not make a payment
sq sq sq sq sq sq sq sq sq sq sq sq
Debit Cards - ans-Not money. It is like an electronic check.
sq sq sq sq sq sq sq sq sq sq
Mobile Wallet - ans-is an electronic version of a physical wallet.
sq sq sq sq sq sq sq sq sq sq
