MAC14L1

  • 1

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    Money ______________________.

    requires a double coincidence of wants
    is any commodity that is generally acceptable as a means of payment
    loses its value as it becomes older
    is always composed of coins and paper

  • 2

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    If an economy has no money, then all transactions must be conducted through the use of ______.

    debit cards
    barter
    tobacco or wampum
    credit cards

  • 3

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    U.S. currency __________________.

    is the sum of M1 and M2
    is composed of the bills and coins that we use today
    is less efficient than barter
    includes tobacco

  • 4

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    A savings bank is a financial intermediary that ______________.

    is owned by a social or economic group
    makes mostly mortgage loans
    sells shares which it uses to purchase shares in U.S. Treasury bills
    makes mostly consumer loans

  • 5

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    M1 includes all the following items except _______________.

    traveler's checks
    saving deposits
    checking deposits owned by individuals and businesses
    currency owned by individuals and businesses

  • 6

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    M2 ____________________.

    includes term deposits
    is a broader measure of money than M1
    does not include traveler's checks
    does not include currency

  • 7

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    Liquidity _____________________.

    increases when a consumer has more credit cards
    is the property of being instantly convertible into money
    increases when a country owns gold
    is how quickly an asset loses its worth

  • 8

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    A financial intermediary is a firm that takes deposits from _______ and makes loans to _______.

    households, firms
    households and firms, other households and firms
    firms, other firms
    firms, households

  • 9

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    The balance sheet of a commercial bank can be described by the equation:

    Net worth + Assets = Liabilities
    Assets = Liabilities + Net worth
    Net worth + Assets + Liabilities = 1
    Liabilities + Assets = Net worth

  • 10

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    Reserves are ______________________.

    gold in a bank's vault plus its gold at Federal Reserve banks
    cash in a bank's vault plus its deposits at Federal Reserve banks
    cash in a bank's vault plus the cash carried by its customers
    cash in a bank's vault plus its gold at Federal Reserve banks

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