ECON 200 UOFA EXAM 3 | ACTUAL PRACTICE EXAM
QUESTIONS WITH 100% CORRECT ANSWERS | LATEST
UPDATED 2026/2027 | GRADED A+ | GUARANTEED
SUCCESS.
If nominal GDP is 1,000b and money stock given by M1 is 250b, the velocity of
money in this economy is
A) 4.
B) 0.4.
C) 0.25.
D) 250,000. --CORRECT ANSWER--A
Why is the velocity of money higher when money stock is measured by M1
rather than M2?
A) M1 includes only savings accounts whereas M2 also includes checking
accounts.
B) M1 is more liquid and easily transferable than M2.
C) M2 is more liquid and easily transferable than M1.
D) M2 includes gold and silver whereas M1 also includes checking accounts. --
CORRECT ANSWER--B
The direct trade of goods and services for other goods and services is called
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,A) financial intermediation.
B) diversification.
C) barter.
D) using a medium of exchange. --CORRECT ANSWER--C
Banks hold reserves
A) to earn interest.
B) to increase profits.
C) only because the government requires them to hold reserves.
D) to meet depositor withdrawals and payments. --CORRECT ANSWER--D
There is $5,000,000 of currency in Econland, which are all held by banks as
reserves. The public does not hold any currency. If the banks' desired
reserve/deposit ratio is 0.25, then the money supply equals
A) $20,000,000
B) $1,250,000
C) $6,250,000
D) $5,000,000 --CORRECT ANSWER--A
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, Which of the following helps explain why banks charge for wire transfers but
not for funds deposited by check?
A) It would not be fair to charge for depositing checks, which often take several
days to clear.
B) Because wire transfers generally involve larger sums, customers can afford
to pay more.
C) There is greater risk of fraud for funds transferred by wire.
D) Funds are more costly for banks to transfer electronically than by check. --
CORRECT ANSWER--B
M1 differs from M2 in that
A) M1 includes currency and balances held in checking accounts, which are not
included in M2.
B) M2 includes savings deposits, small-denomination time deposits, and money
market mutual funds that are not included in M1.
C) M1 is a broader measure of the money supply than M2.
D) the assets in M2 are more liquid than the assets in M1. --CORRECT
ANSWER--B
Which of the following conclusions is implied by the fact that banks charge for
wire transfers but not for funds deposited by check?
A) Wire transfer fees are mandated by banking regulations.
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QUESTIONS WITH 100% CORRECT ANSWERS | LATEST
UPDATED 2026/2027 | GRADED A+ | GUARANTEED
SUCCESS.
If nominal GDP is 1,000b and money stock given by M1 is 250b, the velocity of
money in this economy is
A) 4.
B) 0.4.
C) 0.25.
D) 250,000. --CORRECT ANSWER--A
Why is the velocity of money higher when money stock is measured by M1
rather than M2?
A) M1 includes only savings accounts whereas M2 also includes checking
accounts.
B) M1 is more liquid and easily transferable than M2.
C) M2 is more liquid and easily transferable than M1.
D) M2 includes gold and silver whereas M1 also includes checking accounts. --
CORRECT ANSWER--B
The direct trade of goods and services for other goods and services is called
Page 1 of 24
,A) financial intermediation.
B) diversification.
C) barter.
D) using a medium of exchange. --CORRECT ANSWER--C
Banks hold reserves
A) to earn interest.
B) to increase profits.
C) only because the government requires them to hold reserves.
D) to meet depositor withdrawals and payments. --CORRECT ANSWER--D
There is $5,000,000 of currency in Econland, which are all held by banks as
reserves. The public does not hold any currency. If the banks' desired
reserve/deposit ratio is 0.25, then the money supply equals
A) $20,000,000
B) $1,250,000
C) $6,250,000
D) $5,000,000 --CORRECT ANSWER--A
Page 2 of 24
, Which of the following helps explain why banks charge for wire transfers but
not for funds deposited by check?
A) It would not be fair to charge for depositing checks, which often take several
days to clear.
B) Because wire transfers generally involve larger sums, customers can afford
to pay more.
C) There is greater risk of fraud for funds transferred by wire.
D) Funds are more costly for banks to transfer electronically than by check. --
CORRECT ANSWER--B
M1 differs from M2 in that
A) M1 includes currency and balances held in checking accounts, which are not
included in M2.
B) M2 includes savings deposits, small-denomination time deposits, and money
market mutual funds that are not included in M1.
C) M1 is a broader measure of the money supply than M2.
D) the assets in M2 are more liquid than the assets in M1. --CORRECT
ANSWER--B
Which of the following conclusions is implied by the fact that banks charge for
wire transfers but not for funds deposited by check?
A) Wire transfer fees are mandated by banking regulations.
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