Quiz 1

Question 0

3 important functions of money

Answer 0

Medium of exchange, standard of value, and store of value

Question 1

Anything that people will accept as payment for goods and services

Answer 1

Money

Question 2

Money must serve as a what?

Answer 2

Medium of exchange

Question 3

A means through which goods and services can be exchanged

Answer 3

A medium of exchange

Question 4

The exchange of goods and services without using money

Answer 4

Barter

Question 5

Determined the economic worth in the exchange process

Answer 5

A standard of value

Question 6

Something that holds its value over time

Answer 6

Store of value

Question 7

A situation where money does not function well as a store of value is when the economy experiences what?

Answer 7

Significant inflation

Question 8

A sustained rise in the general level of prices

Answer 8

Inflation

Question 9

Physical properties of money are what

Answer 9

Durability, portability, divisibility, uniformity

Question 10

Economic properties of money are what

Answer 10

Stability of value, scarcity, and acceptability

Question 11

3 sources of money

Answer 11

Commodity money, representative money, fiat money

Question 12

Derives its value from the type of material from which it is exposed

Answer 12

Commodity money

Question 13

The most common form of commodity money throughout history

Answer 13

Coins made from precious metals

Question 14

Paper money back by something- gold or silver- that gives it value

Answer 14

Representative money

Question 15

The earliest forms of representative money were seen in the _____

Answer 15

Middle Ages

Question 16

Began issuing receipts that promised to pay a certain amount of gold or silver

Answer 16

Merchants, goldsmiths, and moneylenders

Question 17

These practices signal the beginning of widespread modern use of ____

Answer 17

Paper money

Question 18

declared by the government and accepted by citizens to have worth

Answer 18

fiat money

Question 19

The value of the US dollar was linked to the value of ____ until 1971

Answer 19

gold

Question 20

coins contain only a taken amount of precious metal that is worth less than the face value of those coins

Answer 20

fiat money

Question 21

A crucial role of the government in maintaining the value of fiat money is controlling its supply- in other words, maintain its _______

Answer 21

scarcity

Question 22

what is currency

Answer 22

paper money and coins

Question 23

Checking accounts are called ___

Answer 23

demand deposits

Question 24

called so because funds in checking accounts can be converted into currency "on demand"

Answer 24

Demand deposits

Question 25

saving accounts, and time deposits that can be converted into cash relatively easy

Answer 25

Near money

Question 26

Most demand deposits are _______ that can be converted into currency simply by writing a check

Answer 26

non-interest bearing checking accounts

Question 27

also considered demand deposits

Answer 27

Travelers checks

Question 28

are interest-bearing savings accounts against which drafts may be written

Answer 28

Negotiable order of withdrawal (NOW) accounts

Question 29

______ such as savings accounts and other interest-bearing accounts, cannot be used directly to make transactions

Answer 29

Near money

Question 30

funds that people place in a financial institution for a specific period of time in return for a higher interest rate which are often placed in a certificate of deposit (CD)

Answer 30

Time deposits

Question 31

place restrictions on the number of transactions you can make in a month and require you to maintain a certain balance in the account in order to receive a higher rate of interest

Answer 31

Money market accounts

Question 32

Economists use various instruments to measure the money support but the most often cited are _____

Answer 32

m1 and m2

Question 33

the narrowest measure of the money supply, consisting of currency, demand exposure, and other checkable deposits

Answer 33

m1

Question 34

The element of m1 are referred to as ______, which means that they are or can easily become currency

Answer 34

liquid assets

Question 35

a broader measure of the money supply, consisting of m1 plus various kinds of near money

Answer 35

m2

Question 36

M2 includes _____

Answer 36

savings accounts, small-denominational time deposits, and money market mutual funds