ECO 473 Test Bank 1

ECO 473 Test Bank 1 Which of the following is not included in M1? a. Currency. b. Traveler's checks. c. Transaction deposits. d. Savings deposits. e. Checking accounts. - CORRECT ANSWERS d. savings deposits The functions of money include all of the following, except as a: a. medium of exchange. b. store of value. c. barter. d. unit of account. e. standard of deferred payment. - CORRECT ANSWERS c. barter Monetary aggregates are groupings of financial assets that are combined based on their degree of liquidity. Which of the following is most liquid? a. M1 b. M2 c. M3 d. Both M1 and M2 are equally liquid, and more so than M3. e. M1, M2 and M3 are all equally liquid. - CORRECT ANSWERS a. M1 Which of the following would be consistent with a "fiat" money? a. It is portable. b. It is a commodity money. c. It can be converted into a precious metal. d. All of the above. e. None of the above. - CORRECT ANSWERS a. it is portable Which of the following is true about "debasing?" a. If anything, it will cause deflation. b. It promotes the circulation of less popular metals. c. It cannot be done to commodity money. d. It cannot be done to representative money. e. All of the above are true. - CORRECT ANSWERS b. it promotes the circulation of less popular metals The money measure M2 includes: a. savings deposits. b. currency. c. travelers checks. d. demand deposits at financial institutions. e. All of the above. - CORRECT ANSWERS e. All of the above A barter system requires: a. a medium of exchange. b. a double coincidence of wants. c. use of a commodity money. d. prices measured in nominal terms. e. All of the above. - CORRECT ANSWERS b. a double coicidence of wants Which of the following is the least liquid financial asset? a. Currency in your pocket. b. A savings deposit. c. Diamonds. d. Traveler's checks. e. A U.S. Savings Bond. - CORRECT ANSWERS c. Diamonds Which of the following would likely best serve as a commodity money? a. U.S. dollar bills. b. Gold c. Tomatoes. d. Feathers. e. Hydrogen gas. - CORRECT ANSWERS b. Gold You walk into a store in Mexico. The prices are in pesos. The owner will