This quiz, titled 'Money and Banking [Ch. 3]', explores fundamental concepts of money's role in the economy. It assesses understanding of money as a medium of exchange, the inefficiencies of barter systems, and the liquidity of money. Essential for students or professionals in economics and finance.
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An economy using fold as a commodity money
A barter economy
An economy using fiat money
An economy using currency and deposit money
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False
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Store of value
Medium of exchange
Protection against inflation
Unit of account
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A five dollar bill
A twenty dollar gold piece
Sea shells used as money in a primitive society
Cigarettes in a POW camp
All of the above
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False
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Money
Wealth
Income
All of the above
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Can be converted into a medium of exchange with relative ease and speed
Generates high transactions costs when liquidating
Is an excellent store of value
Acts as a unit of account
All of the above
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Store of value
Medium of exchange
Protection against inflation
Unit of account
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An economy using gold as a commodity money
A barter economy
An economy using fiat money
An economy using currency and deposit money
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False
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Checks
Commodity money
Fiat money
Electronic payment
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M1 only
M2 only
M1 and M2
Checkable deposits are not included in either of the monetary aggregates
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The assets in M1 are more liquid than the assets in M2
The assets in M2 are more liquid than the assets in M1
All of the assets in the monetary aggregates have equal liquidity because they are all considered money
The only liquid asset in the monetary aggregates is currency
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A five dollar bill
A check drawn on a bank account in the United States
A credit card
Cigarettes in a POW camp
All of the above
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Fiat money is paper currency decreed by government as legal tender
Fiat money is easier to transport than commodity money
Fiat money is redeemable into a particular precious metal such as gold
Fiat money should be made difficult to counterfeit
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Currency
Large-denomination time deposits
Small-denomination time deposits
Savings deposits
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Unit of account
Medium of exchange
Liquid asset
Store of value
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Money market deposit accounts
Currency
Demand deposits
NOW accounts
Traveler's checks
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More efficient than a barter economy because transactions costs are lower
More efficient than a barter economy because fewer prices are needed to establish relative values between all commodities
Less efficient than a barter economy because a money economy requires that there be a double coincidence of wants in order for there to be an exchange
Less efficient than a barter economy because money is costly to transport
Both (a) and (b) are correct
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M1 is greater than M2
The growth rates of M1 and M2 always track each other very closely
The Fed is more concerned with long-run movements in the monetary aggregates rather than the short-run movements
The Fed rarely revises its estimates of the monetary aggregates
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I must be widely accepted
It must be standardized
It must be divisible
It should be able to be easily reproduced by everyone in the economy
All of the above are characteristics of an effective commodity money
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Barter requires that there be a double coincidence of wants in order for there to be an exchange
Barter requires an enormous number of prices in order for every good to be valued in terms of every other good
In a barter economy, it is difficult for people to specialize in the production of just one item
Barter generates very low transaction costs
In a barter economy, goods are exchanged directly for other goods
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Debit card
Stored-value card
Smart card
Credit card
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QUIZ For Money And Banking
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