Term
| The two basic components of the U.S. money supply (M1) are physical money and deposit money |
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Definition
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Term
| Representative full-bodied money consists of paper money fully backed by a precious metal. |
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Definition
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Term
| Fiat money must be backed by a specific amount of gold or silver. |
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Definition
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Term
| A bimetallic standard is a monetary standard based only on gold. |
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Definition
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Term
| Demand deposits are issued by commercial banks and savings banks. |
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Definition
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Term
Our monetary standard today is the paper dollar, issued by the Federal Reserve, and can be exchanged for
gold or silver. |
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Definition
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Term
| No full-bodied or representative full-bodied money is in use in the United States today. |
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Definition
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Term
| No other asset is as liquid as money, because money is itself, a medium of exchange. |
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Definition
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Term
| Fiat money is legal tender proclaimed to be money by law. |
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Definition
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Term
| Physical money includes coin and currency. |
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Definition
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Term
| “Continentals” were denominated in dollars and were backed by gold. |
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Definition
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Term
| The use of “continentals” led to a long period of distrust of paper money. |
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Definition
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Term
| The faster velocity of money, the greater an economy’s GDP. |
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Definition
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Term
| Fiat money is a form of credit money. |
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Definition
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Term
| A major objective of the Fed is to regulate and control the supply of money and the availability of credit. |
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Definition
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Term
Even though credit card balances and limits are not included in any definition of money supply, these
balances and limits can affect the rate of turnover of money supply and contribute to money supply expansion. |
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Definition
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Term
According to the Bretton Woods agreement, one ounce of gold is set equal to US $35, and each participating
country pegs its currency to gold or the U.S. dollar. |
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Definition
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Term
| Inflation leads to an increase in the purchasing power of money. |
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Definition
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Term
| The U.S. dollar was defined in terms of gold until the 1980s. |
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Definition
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Term
The bimetallic standard was difficult to maintain because the market ratio between silver and gold changed
constantly. |
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Definition
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Term
| Inflation reflects a rise in prices not offset by increases in quality. |
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Definition
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Term
| Inflation reflects a rise in prices whether or not that rise in prices is offset by an increase in quality. |
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Definition
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Term
| A central bank defines and regulates the amount of the money supply in the financial system. |
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Definition
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Term
The faster the rate of circulation of the money supply, the greater the output of goods and services in an
economy. |
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Definition
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Term
| Primitive economies have little occasion to exchange goods or services. |
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Definition
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Term
The monetary system is responsible for carrying out the financial functions of creating and transferring
money. |
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Definition
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Term
| Money is anything generally accepted as a means of paying for goods and services and for paying off debts. |
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Definition
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Term
| Money is perfectly liquid |
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Definition
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Term
Fiat money generally becomes worthless if the issuing government – such as the Confederate government of
the Civil War –fails. |
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Definition
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Term
Representative full-bodied money is paper money that is backed by an amount of precious metal equal in
value to the face amount of the paper money. |
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Definition
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Term
| Deposit money is backed by the creditworthiness of the depository institution that issued the deposit |
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Definition
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Term
| Fiat money is paper money fully backed by a precious metal such as gold. |
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Definition
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Term
Keynesians believe that when the supply of money exceeds the quantity demanded, the public will spend
more rapidly causing inflation. |
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Definition
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Term
Keynesians believe that a change in the money supply first causes a change in interest rate levels, which, in
turn, alters the demand for goods and services. |
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Definition
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Term
| A bimetallic standard is a monetary standard based on two metals, usually silver and gold. |
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Definition
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Term
| Full-bodied money is a monetary standard based on two metals, usually silver and gold. |
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Definition
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Term
| Representative full-bodied money is paper money fully backed by a precious metal such as gold. |
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Definition
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Term
| Paper money fully backed by a precious metal and issued by the government is called: |
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Definition
| representative full-bodied money |
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Term
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Definition
| legal tender proclaimed to be money by law |
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Term
With a mint ratio of 15 ounces of silver to 1 ounce of gold and a market ratio of 15.5 ounces of silver to 1
ounce of gold: |
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Definition
| gold coins should go out of circulation |
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Term
| The U.S. bimetallic standard was based on: |
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Definition
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Term
Which of the following would not be considered liquid?
a. money in savings accounts
b. coins
c. currency
d. all the above are liquid |
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Definition
| a. money in savings accounts b. coins c. currency Answer:d. all the above are liquid |
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Term
| When it is a means of paying for goods and services and discharging debts, money is referred to as a: |
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Definition
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Term
| Which of the following statements are correct? |
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Definition
| debit cards provide for the immediate direct transfer of deposit accounts |
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Term
Under the Bretton Woods agreement, a fixed exchange rate system tied to gold and the U.S. dollar
dominated international trade during: |
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Definition
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Term
| The only paper money of significance in the economy today is: |
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Definition
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Term
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Definition
| coins containing metal of less value than their stated value |
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Term
| Which of the following describes the basic function of money? |
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Definition
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Term
| The M1 definition of the money supply includes which of the following items? |
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Definition
a. currency
b. demand deposits and other checkable deposits at depository institutions
c. travelers’ checks |
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Term
Which of the following statements is false?
a. The Bretton Wood System of fixed exchange rates was maintained until 1975.
b. Under the Bretton Wood System, one ounce of gold was set equal to $35.
c. Under the Bretton Wood System, each participating country had it currency pegged to either gold or the U.S. dollar.
d. All of the above statements are correct.
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Definition
| The Bretton Wood System of fixed exchange rates was maintained until 1975. |
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Term
| Which of the following are not included in M1? |
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Definition
| money market deposit accounts |
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Term
Money market mutual funds do which of the following?
a. issue shares to customers
b. invest in liquid instruments
c. invest in interest-bearing debt instruments |
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Definition
a. issue shares to customers
b. invest in liquid instruments
c. invest in interest-bearing debt instruments
Answer:d. all of the above |
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Term
| Which of the following statements is most correct? |
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Definition
| Both gold and silver have now been completely removed from any monetary role in the U.S. economy. |
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Term
Which of the following statements is false?
a. Money can always function as a store of purchasing power, even if its value is relatively unstable.
b. The ease with which an asset can be exchanged for money or other assets is referred to as liquidity.
c. Credit money is any circulating medium which has little intrinsic value relative to its monetary value.
d. In the future, electronic funds transfer systems may be used to such an extent that a virtually checkless society may result.
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Definition
| Money can always function as a store of purchasing power, even if its value is relatively unstable. |
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Term
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Definition
a. paper money issued by central banks with full metallic backing
b. government notes representing a specific amount of gold in storage
c. full-bodied money |
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Term
| Any circulating money which has little real value relative to its monetary value is called: |
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Definition
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Term
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Definition
an increase in the prices of goods and services not offset by increases in the quality of those goods and
services |
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Term
The function of money that expresses prices and contracts for deferred payments in terms of the monetary
unit is referred to as: |
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Definition
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Term
| Credit card usage may do what to the money supply? |
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Definition
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Term
Which are included in the money supply?
a. outstanding balances on credit cards
b. credit card limits
c. both the above
d. neither the above |
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Definition
| a. outstanding balances on credit cards b. credit card limits c. both the above Answer: neither the above |
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Term
| The supply of a currency in international markets depends largely on the: |
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Definition
| imports of the issuing country |
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Term
| The advantages claimed for a bimetallic standard were not gained in actual practice because: |
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Definition
| one of the metals disappeared from circulation because the mint and market ratios were not the same |
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Term
| Barter involves the exchange of: |
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Definition
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Term
When coins have an intrinsic value equal to the value of the metal they contain, they are
referred to as: |
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Definition
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Term
Which of the following are not depository institutions?
a. The Federal Reserve
b. credit unions
c. savings banks
d. commercial banks
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Definition
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Term
| “Continentals” were backed by: |
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Definition
| possible future tax revenues |
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Term
| Today’s Federal Reserve notes are: |
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Definition
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Term
| Credit money is backed by: |
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Definition
| creditworthiness of the issuer |
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Term
| Deposit money is backed by: |
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Definition
| creditworthiness of the depository institution |
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Term
| The savings-investment process |
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Definition
| involves the transfer in individual savings to business firms in exchange for their securities. |
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Term
| All money should perform the following functions EXCEPT: |
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Definition
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Term
| The velocity of money measures: |
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Definition
| the rate of circulation of the money supply |
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Term
| Three of the functions of money are: |
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Definition
| medium of exchange, store of value, and standard of value |
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Term
An increase in the general overall prices of goods and services that is not offset by increases in the quality of
those goods and services is the definition for: |
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Definition
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Term
Functions of money include all of the following EXCEPT:
a. Money serves as a medium of exchange.
b. Money may be held as a store of value.
c. Money serves as a standard of value.
d. All of the above are functions of money. |
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Definition
| a. Money serves as a medium of exchange. b. Money may be held as a store of value. c. Money serves as a standard of value. Answer: All of the above are functions of money. |
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Term
| Functions of money include all of the following EXCEPT: |
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Definition
| Money determines the wealth of a nation. |
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Term
| A monetary standard based on two metals, usually silver and gold is called: |
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Definition
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Term
| Paper money backed by a precious metal is called: |
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Definition
| representative full-bodied money |
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Term
| Legal tender proclaimed to be money by law is called: |
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Definition
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Term
| A measure of the output of goods and services in an economy is called: |
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Definition
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Term
| If the money supply for an economy is $3 trillion and the velocity of money is 4.5, then GDP is: |
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Definition
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Term
| If the money supply for an economy is $3 trillion and GDP is $10 trillion, then the velocity of money is: |
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Definition
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Term
| A rise in prices not offset by increases in quality is called: |
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Definition
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Term
A rise in prices that is fully offset by increases in quality is called:
a. deflation
b. inflation
c. stagflation
d. none of the above |
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Definition
| a. deflation b. inflation c. stagflation Answer: none of the above |
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Term
A major factor in the severity of the 2007-09 financial crisis was the massive amounts of debt taken on by:
a. individuals
b. business
c. government
d. all of the above |
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Definition
| a. individuals b. business c. government Answer: all of the above |
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Term
A major factor in the severity of the 2007-09 financial crisis was the massive reduction in the level of debt taken on by:
a. individuals
b. business
c. government
d. all of the above
e. none of the above |
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Definition
| a. individuals b. business c. government d. all of the above Answer: none of the above |
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Term
Historically speaking, ___________ taken as a group has/have generally been a surplus economic unit in the
past: |
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Definition
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Term
____________ include the direct ownership of land, buildings or homes, equipment, inventories, durable
goods, and even precious metals. |
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Definition
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Term
____________ is money, debt instruments, equity securities, and other financial contracts that are backed by
real assets and the earning abilities of issuers. |
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Definition
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Term
____________ is anything generally accepted as a means of paying for goods and services and for paying
off debts. It must be easily divisible, so that exchanges can take place in small or large quantities; relatively
inexpensive to store and transfer; and reasonably stable in value over time. |
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Definition
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Term
____________ accounts are increasingly used to make direct deposits to, and payments from, checkable
deposit accounts. |
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Definition
| ATS (automatic transfer service) |
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Term
____________ are debt instruments or securities with maturities of one year or less and have low default
risk and high liquidity. |
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Definition
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Term
A ____________ is a short-term debt instrument issued by commercial banks in denominations of $100,000
or more with typical maturities ranging from one month to one year that have an active secondary market that
allows short-term investors to easily match their cash or liquidity needs when they arise. |
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Definition
| negotiable certificate of deposit (NCD) |
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Term
_____________ is a short-term debt instrument issued by commercial banks in denominations of $100,000
or more with typical maturities ranging from one month to one year that have an active secondary market that
allows short-term investors to easily match their cash or liquidity needs when they arise. |
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Definition
| A negotiable certificate of deposit (NCD) |
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Term
_____________ is a short-term unsecured promissory note issued by a high credit–quality corporation with
maturities of one to three months in length with an active secondary money. |
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Definition
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Term
_____________ is a promise of future payment issued by a firm and guaranteed by a bank that is used to
finance international trade with typical maturities ranging from one to six months. |
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Definition
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Term
_____________ is a short-term debt security sold by a business firm or financial institution to another
business or institution where the seller agrees to buy back the security at a specified price and date. |
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Definition
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Term
_____________ are very short-term loans, usually with maturities of one day to one week made between
depository institutions. |
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Definition
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Term
The velocity of money measures the rate of circulation of the money supply and can be expressed by the
following equation (note: GDP = gross domestic product and MS = money supply): |
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Definition
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Term
| If annual GDP is $100 billion and the MS is $20 billion, the velocity of money (VM) is ________. |
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Definition
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Term
_____________ believe that when the money supply exceeds the amount of money demanded, the public
will spend more rapidly, causing real economic activity or prices to rise. They also believe that a too-rapid rate
of growth in the money supply will ultimately result in rising prices or inflation because excess money will be
used to bid up the prices of existing goods. |
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Definition
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Term
_____________ believe that a change in the money supply first causes a change in interest rate levels,
which, in turn, alters the demand for goods and services |
|
Definition
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|
Term
A major international development occurred on January 1, 1999, when twelve European countries gave up
their individual currencies and adopted a unified currency called the _____________. |
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Definition
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Term
| The price level of goods and services may be expressed as the ratio of _____________. |
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Definition
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|
Term
| Real output in an economy may be expressed as the ratio of _____________. |
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Definition
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|
Term
| ____________ provide predetermined credit limits to consumers at the time the cards are issued. |
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Definition
|
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Term
_______________________issue shares to customers and invest the proceeds in highly liquid, very-short maturity,
interest-bearing debt instruments called money market investments. |
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Definition
| Money market mutual funds (MMMFs) |
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Term
_______________________ is the sum of an individual’s money, real assets, and financial assets or claims
against others less the individual’s debt obligations. |
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Definition
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Term
_______________________issue shares to customers and invest the proceeds in highly liquid, very-shortmaturity, interest-bearing debt instruments called money market investments.
a. Commercial banks
b. Corporations
c. Insurance companies
d. none of the above
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Definition
| a. Commercial banks b. Corporations c. Insurance companies Answer: none of the above |
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Term
| The price level of goods and services may be expressed as the ratio of _____________. |
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Definition
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|
Term
_____________ believe that a change in the money supply first causes a change in interest rate levels,
which, in turn, alters the demand for goods and services. |
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Definition
a. Monetarists
b. Supply Siders
c. Neo Classicalists
Answer: none of the above |
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