Econ Test 3-12

57 Questions | Total Attempts: 360

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Social Science Quizzes & Trivia

Questions and Answers
  • 1. 
    To an economist, money is a synonym for which of the following?
    • A. 

      Income

    • B. 

      Credit

    • C. 

      Wealth

    • D. 

      Salary

    • E. 

      None of the above

  • 2. 
    Barter is
    • A. 

      The exchange of money for goods and then the exchange of those goods for money.

    • B. 

      The exchange of money for money, or the exchange of money for stocks and bonds.

    • C. 

      The exchange of goods and services for goods and services without the use of money.

    • D. 

      Any exchange, with or without the use of money, in which the participants negotiate (or barter) the price of the goods to be exchanged.

  • 3. 
     Which of the following illustrates a barter transaction?
    • A. 

      A bushel of oranges is traded for a bushel of apples.

    • B. 

      Someone buys a pizza for the special price of $4.

    • C. 

      Someone buys a house for $100,000.

    • D. 

      B and c

    • E. 

      A, b, and c

  • 4. 
    Transaction costs are best defined as the
    • A. 

      Various costs of different goods and services.

    • B. 

      Cost of one good in terms of another; that is, the price of apples in terms of oranges.

    • C. 

      Costs involved in borrowing money from someone, that is, the interest that must be paid for the use of someone else's money.

    • D. 

      Costs associated with the time and effort necessary to make an exchange.

  • 5. 
    In which situation are transaction costs most likely to be the lowest?
    • A. 

      Rodney buys antiques; he is currently looking for an eighteenth-century table.

    • B. 

      Cathy is looking for someone who is willing to trade accounting services (in return) for law services.

    • C. 

      Rodriguez wants to buy a house with two master bedrooms.

    • D. 

      Melinda wants to buy a McDonald's Big Mac (she will not be asking for a special order).

  • 6. 
    Which of the following is a correct listing of money's functions?
    • A. 

      Source of credit, value of transaction costs, unit of barter

    • B. 

      Medium of barter, medium of exchange, medium of transactions

    • C. 

      Unit of barter, unit of account, a unit of income

    • D. 

      Store of value, store of exchange, measure of account

    • E. 

      Store of value, medium of exchange, unit of account

  • 7. 
    Money's basic advantage as compared to barter is that
    • A. 

      Everybody has money but not everyone has the opportunity to barter.

    • B. 

      A money system relies on a double coincidence of wants.

    • C. 

      Money reduces transaction costs.

    • D. 

      Money is the only medium you can use to store your wealth.

  • 8. 
    If peanuts were widely accepted for purposes of exchange, then
    • A. 

      Peanuts would be money.

    • B. 

      Peanuts would be less valuable than they are currently.

    • C. 

      We would observe people using peanuts to purchase cars.

    • D. 

      A and c

    • E. 

      A and b

  • 9. 
    A unit of account is
    • A. 

      A bank account.

    • B. 

      A savings account.

    • C. 

      A common measurement in which values are expressed.

    • D. 

      The same as a medium of exchange.

    • E. 

      None of the above

  • 10. 
       10.   If a person uses money to buy a pair of shoes, money is functioning as
    • A. 

      A unit of account.

    • B. 

      A store of value.

    • C. 

      A medium of exchange.

    • D. 

      None of the above

  • 11. 
       12.   According to the text, the good that emerged as money in World War II POW camps was
    • A. 

      Tinned beef

    • B. 

      Toilet paper

    • C. 

      Cigarettes

    • D. 

      Cheese

  • 12. 
       13.   In the Yap civilization of the South Pacific prior to 1920, large, heavy stones in the shape of a wheel were used as money. Which function of money was probably least served by this form of money?
    • A. 

      Medium of exchange

    • B. 

      Store of value

    • C. 

      Unit of account

    • D. 

      Store of wealth

  • 13. 
       14.   Money evolved out of the self-interested actions of
    • A. 

      Economists.

    • B. 

      Governments

    • C. 

      A few kings and queens.

    • D. 

      Individuals.

  • 14. 
       15.   Compared to barter, money __________ transaction costs, making transactions __________ time-consuming.
    • A. 

      Increases; more

    • B. 

      Increases; less

    • C. 

      Reduces; more

    • D. 

      Reduces; less

  • 15. 
       16.   The requirement of a "double coincidence of wants" is the chief __________ of the __________ exchange system.
    • A. 

      Advantage; barter

    • B. 

      Advantage; monetary

    • C. 

      Disadvantage; barter

    • D. 

      Disadvantage; monetary

  • 16. 
       17.   Your neighbor has knowledge of economics and you would like her to share it with you. You own a car, a CD player and a new pair of running shoes. You wish to make a trade, but the neighbor does not want what you have. The problem can be stated as follows: You are not satisfying the
    • A. 

      Rule of transaction costs.

    • B. 

      Double coincidence of wants.

    • C. 

      Law of marketability.

    • D. 

      Terms of a common denominator.

  • 17. 
       18.   M1 is comprised of currency held outside banks + traveler’s checks + __________.
    • A. 

      Credit cards

    • B. 

      Savings deposits

    • C. 

      Gold

    • D. 

      Checkable deposits

    • E. 

      Money market mutual funds

  • 18. 
       19.   Historically, which of the following goods have evolved into money?
    • A. 

      Gold

    • B. 

      Salt

    • C. 

      Cattle

    • D. 

      Cocoa beans

    • E. 

      All of the above

  • 19. 
       20.   Which of the following statements is true?
    • A. 

      In March 2010, of the three components of M1, the currency held outside banks component was the largest.

    • B. 

      M1 is sometimes referred to as the “broad definition of the money supply”.

    • C. 

      Time deposits are a part of M1, but not M2.

    • D. 

      M1 is a larger dollar figure than M2.

    • E. 

      All of the above statements are false.

  • 20. 
       21.   A "money market deposit account" is a(n)
    • A. 

      Checking account that pays no interest.

    • B. 

      Bank account with a specified maturity date.

    • C. 

      Store of Federal Reserve Notes held in bank vaults to cash checkable deposits on demand.

    • D. 

      Checking account created from an automatic transfer from a savings account.

    • E. 

      Interest-earning account at a bank or thrift institution that usually has a minimum balance requirement.

  • 21. 
       22.   A savings deposit is a type of
    • A. 

      Time deposit that is payable on demand.

    • B. 

      Time deposit that earns interest and allows the depositor to write checks payable to other persons.

    • C. 

      Time deposit that does not earn interest but does offer limited check-writing services.

    • D. 

      Interest-earning account at a bank or thrift institution in which funds can be withdrawn at any time without a penalty payment.

    • E. 

      Checkable deposit that also pays interest.

  • 22. 
       23.   In a barter economy, people are _________ to specialize in the production of one good or service, compared to in a money economy.
    • A. 

      More likely

    • B. 

      Less likely

    • C. 

      Equally likely

    • D. 

      Almost always going

  • 23. 
       24.   M2 is comprised of
    • A. 

      Small-denomination time deposits + savings deposits + money market accounts.

    • B. 

      Small-denomination time deposits + credit cards + money market accounts + gold deposits.

    • C. 

      M1 + small-denomination time deposits + savings deposits + retail money market mutual funds.

    • D. 

      M1 + small denomination time deposits + credit cards + money market accounts.

  • 24. 
       25.   According to the text, L. Frank Baum, the author of The Wonderful Wizard of Oz, blamed ____________________ for the economic depression of 1893 and the related hardships faced by farmers and workers.
    • A. 

      The gold standard

    • B. 

      The silver standard

    • C. 

      A massive tornado

    • D. 

      High taxes

  • 25. 
       26.   A savings account functions as
    • A. 

      A unit of account.

    • B. 

      A store of value.

    • C. 

      A medium of exchange.

    • D. 

      None of the above