The major shortcoming of a barter economy is
Choose the best answer for each question. All problems are weighted equally. By each correct answer you earn one point You earn no points if you don’t answer a question or if your answer is wrong. All your answers must be submitted online using Canvas. Be sure to submit your answers before the due date. No late submission is accepted.
1) The major shortcoming of a barter economy is
A) the requirement of a double coincidence of wants. B) the requirement of specialization and exchange. C) that goods and services are not traded. D) that money loses value from inflation.
2) Commodity money
A) has value independent of its use as money. B) has little to no value independent of its use as money. C) is backed by a valuable commodity such as gold. D) can be used to purchase commodities, but not services.
3) Which of the following functions of money would be violated if inflation were high?
A) unit of account B) store of value C) certificate of gold D) medium of exchange
4) Dollar bills in the modern economy serve as money because
A) they are backed by the gold stored in Fort Knox. B) they can be redeemed for gold by the central bank. C) they have value as a commodity independent of their use as money. D) people have confidence that others will accept them as money.
5) The statement “This Dell laptop.costs $1,200” illustrates which function of money?
A) medium of exchange B) unit of account C) store of value D) standard of deferred payment money
5) The statement “This Dell laptop costs $1,200” illustrates which function of money?
A) medium of exchange B) unit of account C) store of value D) standard of deferred payment
6) The M1 measure of the money supply equals
A) paper money plus coins in circulation. B) currency plus checking account balances. C) currency plus checking account balances plus traveler’s checks. D) currency plus checking account balances plus traveler’s checks plus savings account balances.
7) If a person withdraws $500 from his/her savings account and puts it in his/her checking account, then M1 will and M2 will Macbe
A) increase; decrease B) increase; not change C) not change; Increase D) not change; decrease E) not change; not change
8) If a person withdraws $500 from his/her checking account and holds it as currency, then M1 will and M2 will
A) increase; decrease B) not change; not change C) not change; increase D) decrease; increase E) decrease: decrease Scenario 14-2 Imagine that Kristy deposits $10,000 of currency into her checking account deposit at Bank A and that the required reserve ratio is 20%.
9) Refer to Scenario 14-2. As a result of Kristy’s deposit, Bank A’s reserves immediately increase by
A) $2,000. B) $8,000. C) $10,000. D) $50,000.
10) Refer to Scenario 14-2. As a result of Kristy’s deposit, Bank A’s required reserves increase by
A) $2,000. B) $8,000. C) $10,000. D) $50,000. 0″
11) Refer to Scenario 14-2. As a result of Kristy’s deposit, Bank A can make a maximum loan of
A) $2,000. B) $8,000. C) $10,000. D) $50,000.
12) Refer to Scenario 14-2. As a result of Kristy’s deposit, checking account deposits in the banking system as a whole (including the original deposit) could eventually increase up to a maximum of
A) $8,000. B) $10,000. C) $50,000. D) $100,000. C) $50,000. D) $100,000.
13) Suppose the required reserve ratio is 20 percent. If banks are conservative and choose not to loan all their excess reserves, the real-world deposit multiplier is
A) less than 5. B) equal to 5. C greater than 5. D) equal to 20.
14) If the required reserve ratio is RR, the simple deposit multiplier is defined as 1 (1-RR)
A) B) C) RR) X change in bank reserves. 1 (RR) 1 x change in bank reserves. (RR) 1 x change in bank reserves. (1-RR) D)
15) Suppose there is a bank panic. Which of the following would not be a consequence of this bank panic?
A) Bank total reserves would decrease.
B) Required reserves would increase.
C) Bank checking account balances would decrease.
D) Individual banks would have to shrink the value of loans they made.
E) The economy would likely enter into a recession. I L 1 A E
16) The three main monetary policy tools used by the Federal Reserve to manage the money supply are
A) interest rates, tax rates, and government spending.
B) tax rates, government purchases, and government transfer payments.
C) open market operations, discount policy, and reserve requirements.
D) open market operations, the exchange rate of the dollar against foreign currencies, and government purchases. D
17) To increase the money supply, the Federal Reserve could
A) raise the discount rate.
B) decrease income taxes.
C) raise the required reserve ratio.
D) conduct an open market purchase of Treasury securities.
E) lower transfer payments.
18) To offset the effect of households and firms deciding to hold more of their money in checking account deposits and less in currency, the Federal Reserve could
A) raise bank taxes.
B) sell Treasury securities.
C) raise government spending.
D) lower the required reserve ratio.
19) the quantity theory of money predicts that, in the long run, inflations results from the:
a) velocity of money growing at a faster rate than real GDP
b) velocity of money growing at a lower rate than real GDP
c) money supply growing at a lower rate than real GDP
d) money supply growing at a faster rate than real GDP
20) according to the quantity theory of money, if the money supply grows at 20n percent and real GDP grows at 5 percent, then the inflation rate will be:
a) 15%
b) 20%
c) 25%
d) 100%
21) using the quantity equation, if the velocity of money grows at 5 percent, the money supply grows at 10 percent, and real GDP grows at 4 percent, then the inflation rate will be:
a) 19%
b) 15%
c) 11%
d) 6%
22) the quantity theory of money implies that the price level will be stable (no inflation or deflation) when the growth rate of the money supply equals:
a) 0
b) the growth rate of the price level
c) the growth rate of the velocity of money
d) the growth rate of real GDP
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