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MONEY. 3. Money with intrinsic value is called a. local money b. fiat money c. legal money d. bullion money e. commodity money.

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Presentation on theme: "MONEY. 3. Money with intrinsic value is called a. local money b. fiat money c. legal money d. bullion money e. commodity money."— Presentation transcript:

1 MONEY

2 3. Money with intrinsic value is called a. local money b. fiat money c. legal money d. bullion money e. commodity money

3 4. The most liquid form of money is a. certificates of deposits b. checking accounts c. savings accounts d. time deposits e. currency

4 8. The equation of exchange is a. MQ = PV b. MVP = Q c. M = VPQ d. MP = VQ e. MV = PQ

5 1. Which of the following is an example of fiat money? a. euros b. gold c. silver d. salt e. cigarettes

6 2. The breakdown of the American dollar into quarters, dimes, and pennies illustrates which characteristic of money? a. scarcity b. acceptability c. durability d. divisibility e. portability

7 3. The ease with which an asset can be converted into the economy's medium of exchange is referred to as its a. transferability b. exchangeability c. liquidity d. acceptability e. durability

8 6. Money used to buy a car serves as a(n) a. unit of value b. commodity c. store of value d. unit of account e. medium of exchange

9 7. Money in the bank serves as a(n) a. unit of account b. medium of exchange c. commodity d. unit of value e. store of value

10 8. A watermelon is valued at 2 dollars. This represents money's function as a(n) a. commodity b. unit of account c. unit of value d. medium of exchange e. store of value

11 9. Money must be able to be used in multiple transactions without wearing out. This represents which characteristic of money? a. acceptability b. durability c. scarcity d. portability e. divisibility

12 10. Money must be easy to transport. This represents which characteristic of money? a. divisibility b. acceptability c. scarcity d. durability e. portability

13 TRUE or FALSE 11. The United States Dollar is an example of commodity money. 12. Fiat money is created by government decree. 13. Money replaced barter, which required a double coincidence of wants. 14. United States Dollars are backed by gold. 15. Interest is the cost of using money or credit. F T T F T

14 4. The direct exchange of goods for other goods is known as a. commerce b. barter c. finance d. retail e. wholesale

15 5. Money facilitates trade by removing the need for a. voluntary exchange b. a double coincidence of wants c. property rights d. supply and demand e. markets

16 6. Barter is an example of a a. store of value b. means of exchange c. unit of account d. means of account e. unit of value

17 GDP

18 5. Which of the following is not counted in GDP? a. the purchase of ten shares of Google stock b. the government's purchase of aircraft carriers c. the purchase of a haircut d. the purchase of new fashionable running shoes e. the construction of a manufacturing plant

19 11. Which category of GDP is the government's payment of a Social Security check counted in? a. net exports b. government expenditures c. investment d. The government's payment of a Social Security check is NOT counted in GDP. e. consumption

20 6. Which of the following statements is NOT correct? a. Dave's purchase of cocaine is not counted in GDP. b. McDonalds purchase of hamburger buns is counted in consumption. c. Sven the Swede's purchase of American made jeans is counted in net exports. d. The Defense Department's purchase of a tank is counted in government purchases. e. General Motors purchase of machinery is counted in investment.

21 9. Which category makes up the largest share of the United States GDP? a. net exports b. government purchases c. investment d. net imports e. consumption

22 12. Which category of GDP is the purchase of a new home counted in? a. net exports b. government expenditures c. investment d. consumption e. The purchase of a new home is NOT counted in GDP.

23 10. The factors of production flow from a. firms to households via the product market b. households to firms via the product market c. households to firms via the government d. households to firms via the factor market e. firms to households via the factor market

24 11. Goods and services flow from a. firms to households via the factor market b. households to firms via the government c. firms to households via the product market d. households to firms via the factor market e. households to firms via the product market

25 12. The money paid to firms via the product market is called a. wages b. profit c. revenue d. taxes e. income

26 13. The money paid to households via the factor market is called a. wages b. profit c. income d. taxes e. revenue

27 14. The money paid by households and firms to the government is called a. profit b. taxes c. revenue d. wages e. income

28 15. Which of the following represents an injection into the circular flow model? a. rent b. imports c. exports d. savings e. taxes

29 LABOR

30 7. Structural unemployment is caused by a. skills mismatch b. undervalued currency c. economic downturn d. high inflation e. time-lag between jobs

31 8. Frictional unemployment is caused by a. skills mismatch b. undervalued currency c. high inflation d. time-lag between jobs e. economic downturn

32 9. Cyclical unemployment is caused by a. time-lag between jobs b. undervalued currency c. economic downturn d. high inflation e. skills mismatch

33 11. Steve is laid off during a recession. Steve is a. frictionally unemployed b. structurally unemployed c. seasonally unemployed d. cyclically unemployed e. technologically unemployed

34 3. Machines took Dan the factory worker's job. Dan is a. seasonally unemployed b. frictionally unemployed c. structurally unemployed d. technologically unemployed e. cyclically unemployed

35 1. Steve recently quit his job as a bicycle repairman for greater monetary opportunities as a car salesman. Steve is a. technologically unemployed b. cyclically unemployed c. seasonally unemployed d. structurally unemployed e. frictionally unemployed

36 2. Dave, a financial analyst, was laid off during an economic downturn. Dave is a. seasonally unemployed b. structurally unemployed c. cyclically unemployed d. frictionally unemployed e. technologically unemployed

37 13. An abnormally high rate of which type of unemployment indicates a problem in the economy? a. seasonal b. cyclical c. frictional d. structural e. technological

38 4. Jills snow cone parlor shuts down in December. Jill is a. seasonally unemployed b. structurally unemployed c. cyclically unemployed d. technologically unemployed e. frictionally unemployed

39 5. Which of the following is not counted in the natural rate of unemployment and indicates a problem in the economy? a. cyclical unemployment b. technological unemployment c. frictional unemployment d. seasonal unemployment e. structural unemployment

40 6. In the United States, the natural rate of unemployment is approximately a. 2% b. 15% c. 0% d. 10% e. 5%

41 7. Which of the following groups is part of the labor force? a. people in prison b. people counted in the unemployment rate c. people who are retired d. people under sixteen e. people in the army

42 16. Jim, discouraged by his inability to hold down a job, has given up looking for work. Jim is counted in the unemployment rate. F

43 7. If the reserve ratio is 10%, a bank with deposits of $500 can loan out a. $350 b. $100 c. $250 d. $50 e. $450

44 8. If the reserve ratio is 20%, the money multiplier is a. 2 b. 50 c. 5 d. 20 e. 10

45 9. If the reserve ratio is 5%, how much money will be created in the economy by a deposit of $100? a. $100 b. $4000 c. $2000 d. $1000 e. $500

46

47 Monetary & Fiscal Policy

48 1. Modern fiscal policy results from the work of a. Jean Baptiste Say b. Arthur Laffer c. Thomas Malthus d. Arthur Okun e. John Maynard Keynes

49 2. Which policy measure would a Keynesian economist support to combat recession? a. deficit spending b. balanced budget c. decreasing wages d. doing nothing e. printing money

50 3. The goal of fiscal policy is to influence a. aggregate demand b. interest rates c. the money supply d. net exports e. aggregate supply

51 4. Contractionary fiscal policy measures include a. decreasing the money supply and increasing interest rates b. decreasing government spending and the money supply c. increasing taxes and interest rates d. increasing taxes and decreasing government spending e. decreasing taxes and government spending

52 5. Expansionary fiscal policy measures include a. increasing the money supply and taxes b. decreasing interest rates and government spending c. decreasing taxes and increasing government spending d. increasing government spending and decreasing the money supply e. increasing interest rates and decreasing taxes

53 6. What is an appropriate fiscal policy measure to combat inflation? a. increasing government spending b. increasing the discount rate c. increasing the tax rate d. There is no appropriate fiscal policy measure to combat inflation. e. increasing the federal funds rate

54 6. What is an appropriate fiscal policy measure to combat inflation? a. increasing government spending b. increasing the discount rate c. increasing the tax rate d. There is no appropriate fiscal policy measure to combat inflation. e. increasing the federal funds rate

55 7. What is an appropriate fiscal policy measure to combat recession? a. decreasing the federal funds rate b. increasing government spending c. There is no appropriate fiscal policy measure to combat recession. d. increasing the reserve ratio e. purchasing government securities

56 8. What is an appropriate fiscal policy measure to combat stagflation? a. increasing the discount rate b. There is no appropriate fiscal policy measure to combat stagflation. c. decreasing government spending d. purchasing government securities e. decreasing the tax rate

57 10. If MPS is.2, a household with an income of $100,000 will spend a. $60,000 b. $80,000 c. $40,000 d. $20,000 e. $100,000

58 11. If MPC is.75, a household with an income of $100,000 will save a. $10,000 b. $25,000 c. $50,000 d. $85,000 e. $75,000

59 15. Fiscal policy measures that require deliberate action from policy makers is a. automatic fiscal policy b. facultative fiscal policy c. marginal fiscal policy d. discretionary fiscal policy e. technical fiscal policy

60 17. An example of discretionary fiscal policy is a. monetarism b. corporate bailouts c. Social security payments d. open market operations e. unemployment insurance payments

61 18. An example of automatic fiscal policy is a. open market operations b. unemployment insurance payments c. monetarism d. corporate bailouts e. Social Security payments

62 19. The existing national debt is $50 billion. During the fiscal year, the government took in $10 billion in revenue and spent $15 billion. What is the current budget deficit? a. $35 billion b. $5 billion c. $65 billion d. $55 billion e. $25 billion

63 20. The national debt begins the year at $50 billion. During the subsequent fiscal year, the government takes in $10 billion in revenue and spends $15 billion. What is the national debt at the end of the year? a. $65 billion b. $5 billion c. $35 billion d. $25 billion e. $55 billion

64 2. How many district banks make up the Federal Reserve? a. 5 b. 7 c. 10 d. 14 e. 12

65 3. How many people serve on the Federal Reserve Board of Governors? a. 5 b. 12 c. 7 d. 10 e. 14

66 4. Each member of the Federal Reserve Board of Governors is appointed a. to a 4-year term b. for life c. to a 14-year term d. to a 10-year term

67 6. The main function of the Federal Reserve is to a. regulate the money supply b. levy taxes c. conduct fiscal policy d. regulate wages e. regulate international trade

68 8. The current head of the Federal Reserve is a. Rodrigo de Rato b. Robert Zoellick c. Ben Bernanke d. Paul Wolfowitz e. Alan Greenspan

69 9. Buying and selling government securities is a role of the a. Bureau of Labor Statistics b. Council of Economic Advisers c. Federal Open Market Committee d. Federal Advisory Council e. Federal Reserve Board of Governors

70 12. The primary tool of monetary policy is a. open market operations b. the discount rate c. the reserve ratio d. government expenditures e. taxation

71 13. The interest rate the Federal Reserve charges for loans to banks is called the a. consumer rate b. discount rate c. reserve rate d. federal funds rate e. prime rate

72 14. The interest rate on overnight loans between banks is called the a. consumer rate b. discount rate c. federal funds rate d. reserve rate e. prime rate

73 17. An example of a tight money policy is a. decreasing the discount rate b. decreasing the federal funds rate c. increasing the tax rate d. increasing the reserve ratio e. purchasing government securities

74 18. A monetary policy measure to combat recession is a. increasing government expenditures b. increasing the reserve ratio c. purchasing government securities d. decreasing the tax rate e. increasing the federal funds rate

75 19. A monetary policy measure to combat inflation is a. decreasing the tax rate b. increasing government expenditures c. increasing the discount rate d. decreasing the reserve ratio e. decreasing the prime rate

76 10. The interest rate that banks charge their most credit worthy customers is called the a. consumer rate b. annual percentage rate c. prime rate d. discount rate e. federal funds rate

77 11. If the nominal interest rate is 6% and the rate of inflation is 4%, the real interest rate is a. 6% b. 4% c. 10% d. 2% e. 24%

78 15. Which of the following groups of people is helped by inflation? a. those on a fixed income b. debtors c. creditors d. savers e. pensioners

79 11. The Consumer Price Index is compiled by the a. Bureau of Economic Analysis b. Office of Management and Budget c. National Labor Relations Board d. Internal Revenue Service e. Bureau of Labor Statistics

80 12. If the CPI is 120, an ice cream cone that was $2.00 in the base year is now a. $3.60 b. $4.40 c. $2.40 d. $3.20 e. $2.80

81 Occurs when there is an increase in the cost of inputs of supply: a. demand-pull inflation b. cost-push inflation c. disinflation d. deflation e. hyperinflation


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