Chapter 3 MCQ

Economics of Money, Banking, and Financial Markets, 11e (Mishkin)
Chapter 3 What Is Money?
1) To an economist, ________ is anything that is generally accepted in payment for goods and
services or in the repayment of debt.
A) wealth
B) income
C) money
D) credit
2) Currency includes
A) paper money and coins.
B) paper money, coins, and checks.
C) paper money and checks.
D) paper money, coins, checks, and savings deposits.
3) The total collection of pieces of property that serve to store value is a person's
A) wealth.
B) income.
C) money.
D) credit.
4) ________ is used to make purchases while ________ is the total collection of pieces of
property that serve to store value.
A) Money; income
B) Wealth; income
C) Income; money
D) Money; wealth
5) ________ is a flow of earnings per unit of time.

A) Income
B) Money
C) Wealth
D) Currency
6) Of money's three functions, the one that distinguishes money from other assets is its function
as a
A) store of value.
B) unit of account.
C) standard of deferred payment.
D) medium of exchange.
7) If peanuts serve as a medium of exchange, a unit of account, and a store of value, then peanuts
are
A) bank deposits.
B) reserves.
C) money.
1
Copyright © 2016 Pearson Education, Inc.
D) loanable funds.
8) Compared to an economy that uses a medium of exchange, in a barter economy

A) transaction costs are higher.
B) transaction costs are lower.
C) liquidity costs are higher.
D) liquidity costs are lower.
9) Which of the following statements best explains how the use of money in an economy
increases economic efficiency?
A) Money increases economic efficiency because it is costless to produce.
B) Money increases economic efficiency because it discourages specialization.
C) Money increases economic efficiency because it decreases transactions costs.
D) Money cannot have an effect on economic efficiency.
10) As a store of value, money

A) does not earn interest.
B) cannot be a durable asset.
C) must be currency.
D) is a way of saving for future purchases.
11) ________ is the relative ease and speed with which an asset can be converted into a medium
of exchange.
A) Efficiency
B) Liquidity
C) Deflation
D) Specialization
12) If the price level doubles, the value of money

A) doubles.
B) more than doubles, due to scale economies.
C) rises but does not double, due to diminishing returns.
D) falls by 50 percent.
13) A hyperinflation is
A) a period of extreme inflation generally greater than 50% per month.
B) a period of anxiety caused by rising prices.
C) an increase in output caused by higher prices.
D) impossible today because of tighter regulations.
14) During hyperinflations

A) the value of money rises rapidly.
B) money no longer functions as a good store of value and people may resort to barter
transactions on a much larger scale.
C) middle-class savers benefit as prices rise.
D) money's value remains fixed to the price level; that is, if prices double so does the value of
2
money.
15) Compared to checks, paper currency and coins have the major drawbacks that they
A) are easily stolen.
B) are hard to counterfeit.
C) are not the most liquid assets.
D) must be backed by gold.
16) Which of the following sequences accurately describes the evolution of the payments
system?
A) barter, coins made of precious metals, paper currency, checks, electronic funds transfers
B) barter, coins made of precious metals, checks, paper currency, electronic funds transfers
C) barter, checks, paper currency, coins made of precious metals, electronic funds transfers
D) barter, checks, paper currency, electronic funds transfers
17) An important characteristic of the modern payments system has been the rapidly increasing
use of
A) checks and decreasing use of currency.
B) electronic fund transfers.
C) commodity monies.
D) fiat money.
18) Which of the following is NOT a form of e-money?

A) a debit card
B) a credit card
C) a stored-value card
D) a smart card
19) A smart card is the equivalent of

A) cash.
B) savings bonds.
C) savings deposits.
D) certificates of deposit.
20) An electronic payments system has not completely replaced the paper payments system
because of all of the following reasons EXCEPT
A) expensive equipment is necessary to set up the system.
B) security concerns.
C) privacy concerns.
D) transportation costs.
21) A feature of Bitcoin, a new type of electronic money, that make it attractive as a medium of
exchange is
A) anonymous transactions.
B) volatility of value.
C) heavy regulations by the central bank.
3
D) wide acceptance by businesses.
22) The currency component includes paper money and coins held in
A) bank vaults.
B) ATMs.
C) the hands of the nonbank public.
D) the central bank.
23) The M1 measure of money includes

A) small denomination time deposits.
B) traveler's checks.
C) money market deposit accounts.
D) money market mutual fund shares.
24) Which of the following is included in both M1 and M2?

A) currency
B) savings deposits
C) small-denomination time deposits
D) money market deposit accounts
25) Small-denomination time deposits refer to certificates of deposit with a denomination of less
than
A) $1,000.
B) $10,000.
C) $100,000.
D) $1,000,000.
4

Chapter 3 MCQ

Uploaded by

Copyright:

Available Formats

Chapter 3 MCQ

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Chapter 3 MCQ

Uploaded by

Copyright:

Available Formats

Economics of Money, Banking, and Financial Markets, 11e (Mishkin)

Chapter 3 What Is Money?

5) ________ is a flow of earnings per unit of time.

8) Compared to an economy that uses a medium of exchange, in a barter economy

10) As a store of value, money

12) If the price level doubles, the value of money

14) During hyperinflations

18) Which of the following is NOT a form of e-money?

19) A smart card is the equivalent of

23) The M1 measure of money includes

24) Which of the following is included in both M1 and M2?

You might also like

Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.