money-and-bank-test-bank-chap03

1TheEconomicsofMoney,Banking,andFinancialMarkets,9e(Mishkin)Chapter3WhatIsMoney?3.1MeaningofMoney1)Toaneconomist,________isanythingthatisgenerallyacceptedinpaymentforgoodsandservicesorintherepaymentofdebt.A)wealthB)incomeC)moneyD)creditAnswer:CQuesStatus:PreviousEdition2)MoneyisA)anythingthatisgenerallyacceptedinpaymentforgoodsandservicesorintherepaymentofdebt.B)aflowofearningsperunitoftime.C)thetotalcollectionofpiecesofpropertythatareastoreofvalue.D)alwaysbasedonapreciousmetallikegoldorsilver.Answer:AQuesStatus:PreviousEdition3)CurrencyincludesA)papermoneyandcoins.B)papermoney,coins,andchecks.C)papermoneyandchecks.D)papermoney,coins,checks,andsavingsdeposits.Answer:AQuesStatus:PreviousEdition4)Eveneconomistshavenosingle,precisedefinitionofmoneybecauseA)moneysupplystatisticsareastatesecret.B)theFederalReservedoesnotemployorreportdifferentmeasuresofthemoneysupply.C)themoneynessorliquidityofanassetisamatterofdegree.D)economistsfinddisagreementinterestingandrefusetoagreeforideologicalreasons.Answer:CQuesStatus:Revised5)Thetotalcollectionofpiecesofpropertythatservetostorevalueisaperson'sA)wealth.B)income.C)money.D)credit.Answer:AQuesStatus:New26)Aperson'shouseispartofherA)money.B)income.C)liabilities.D)wealth.Answer:DQuesStatus:PreviousEdition7)________isusedtomakepurchaseswhile________isthetotalcollectionofpiecesofpropertythatservetostorevalue.A)Money;incomeB)Wealth;incomeC)Income;moneyD)Money;wealthAnswer:DQuesStatus:PreviousEdition8)________isaflowofearningsperunitoftime.A)IncomeB)MoneyC)WealthD)CurrencyAnswer:AQuesStatus:PreviousEdition9)Anindividual'sannualsalaryisherA)money.B)income.C)wealth.D)liabilities.Answer:BQuesStatus:PreviousEdition10)Whenwesaythatmoneyisastockvariable,wemeanthatA)thequantityofmoneyismeasuredatagivenpointintime.B)wemustattachatimeperiodtothemeasure.C)itissoldintheequitymarket.D)moneyneverlosespurchasingpower.Answer:AQuesStatus:New11)ThedifferencebetweenmoneyandincomeisthatA)moneyisaflowandincomeisastock.B)moneyisastockandincomeisaflow.C)thereisnodifferencemoneyandincomearebothstocks.D)thereisnodifferencemoneyandincomearebothflows.Answer:BQuesStatus:PreviousEdition312)Whichofthefollowingisatruestatement?A)Moneyandincomeareflowvariables.B)Moneyisaflowvariable.C)Incomeisaflowvariable.D)Moneyandincomearestockvariables.Answer:CQuesStatus:Revised13)Whichofthefollowingstatementsusestheeconomists'definitionofmoney?A)Iplantoearnalotofmoneyoverthesummer.B)Betsyisrichshehasalotofmoney.C)IhopethatIhaveenoughmoneytobuymylunchtoday.D)ThejobwithNewCompanygavemetheopportunitytoearnmoremoney.Answer:CQuesStatus:PreviousEdition3.2FunctionsofMoney1)Ofmoney'sthreefunctions,theonethatdistinguishesmoneyfromotherassetsisitsfunctionasaA)storeofvalue.B)unitofaccount.C)standardofdeferredpayment.D)mediumofexchange.Answer:DQuesStatus:PreviousEdition2)Ifpeanutsserveasamediumofexchange,aunitofaccount,andastoreofvalue,thenpeanutsareA)bankdeposits.B)reserves.C)money.D)loanablefunds.Answer:CQuesStatus:PreviousEdition3)________arethetimeandresourcesspenttryingtoexchangegoodsandservices.A)Bargainingcosts.B)Transactioncosts.C)Contractingcosts.D)Bartercosts.Answer:BQuesStatus:PreviousEdition44)Comparedtoaneconomythatusesamediumofexchange,inabartereconomyA)transactioncostsarehigher.B)transactioncostsarelower.C)liquiditycostsarehigher.D)liquiditycostsarelower.Answer:AQuesStatus:PreviousEdition5)Whencomparedtoexchangesystemsthatrelyonmoney,disadvantagesofthebartersysteminclude:A)therequirementofadoublecoincidenceofwants.B)loweringthecostofexchanginggoodsovertime.C)loweringthecostofexchangetothosewhowouldspecialize.D)encouragingspecializationandthedivisionoflabor.Answer:AQuesStatus:PreviousEdition6)TheconversionofabartereconomytoonethatusesmoneyA)increasesefficiencybyreducingtheneedtoexchangegoodsandservices.B)increasesefficiencybyreducingtheneedtospecialize.C)increasesefficiencybyreducingtransactionscosts.D)doesnotincreaseeconomicefficiency.Answer:CQuesStatus:PreviousEdition7)Whichofthefollowingstatementsbestexplainshowtheuseofmoneyinaneconomyincreaseseconomicefficiency?A)Moneyincreaseseconomicefficiencybecauseitiscostlesstoproduce.B)Moneyincreaseseconomicefficiencybecauseitdiscouragesspecialization.C)Moneyincreaseseconomicefficiencybecauseitdecreasestransactionscosts.D)Moneycannothaveaneffectoneconomicefficiency.Answer:CQuesStatus:PreviousEdition8)Wheneconomistssaythatmoneypromotes________,theymeanthatmoneyencouragesspecializationandthedivisionoflabor.A)bargainingB)contractingC)efficiencyD)greedAnswer:CQuesStatus:PreviousEdition59)Money________transactioncosts,allowingpeopletospecializeinwhattheydobest.A)reducesB)increasesC)enhancesD)eliminatesAnswer:AQuesStatus:PreviousEdition10)ForacommoditytofunctioneffectivelyasmoneyitmustbeA)easilystandardized,makingiteasytoascertainitsvalue.B)difficulttomakechange.C)deterioratequicklysothatitssupplydoesnotbecometoolarge.D)hardtocarryaround.Answer:AQuesStatus:PreviousEdition11)AllofthefollowingarenecessarycriteriaforacommoditytofunctionasmoneyexceptA)itmustdeterioratequickly.B)itmus