Ch.3 Review

Question 1

Which one of the following is an Flow Variable: Debt, Money, Income, Savings deposits, and Wealth

Answer 1

Income

Question 2

The difference between what is earned and what is spent. It adds to total wealth.

Answer 2

Savings

Question 3

What you own- total collection of assets that serve to store value

Answer 3

Assets

Question 4

Medium of Exchange

Answer 4

Money being used to pay for goods and services

Question 5

Unit of Account

Answer 5

money being used to measure value in economy

Question 6

Store of Value

Answer 6

money still having value even as you save it

Question 7

How do checkable deposits differ from demand deposits

Answer 7

Demand Deposits can have unlimited numbers of checks written, Checkable have limits on transferability

Question 8

What is the problem with Fiat (Paper) Money

Answer 8

Gov can produce too much

Question 9

Problem with e-money/cashless society

Answer 9

keeping up with security and privacy

Question 10

Which is more liquid M1 or M2?

Answer 10

M1

Question 11

which one is larger M1 or M2?

Answer 11

M2 as it’s M1+ others =M2

Question 12

M1 contains which 3 things (rest usually M2)

Answer 12

Currency, Demand Deposits, and Checkable Deposits