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Multiple Choice Quiz
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1
Which of the following is not a function of money?
A)medium of exchange
B)unit of account
C)store of value
D)means of barter and importation
2
Barter refers to:
A)anything that serves as a commonly accepted medium of exchange.
B)the exchange of goods for other goods.
C)commodity money.
D)anything that serves as a commonly accepted store of value.
3
Money is:
A)anything that serves as a commonly accepted medium of exchange.
B)the exchange of goods for other goods.
C)stock.
D)only M1.
4
M1 consists of:
A)coins.
B)paper currency.
C)checking accounts.
D)all of the above.
5
Assets that banks hold in the form of cash or in funds deposited with the central bank are called:
A)liabilities.
B)net worth.
C)reserves.
D)M2.
6
Coins and paper currency account for:
A)less than half the total of all transactions money.
B)the vast majority of all transactions money.
C)the sum total of all transactions money.
D)the vast majority of the monetary aggregate, M1.
7
"Commercial" banks are the main financial institutions:
A)that sell life insurance.
B)that handle trusts.
C)that make loans aiding consumers.
D)that issue demand deposits.
8
Savings accounts are considered "near-monies" because:
A)most people have savings accounts.
B)you can turn them into cash in a relatively short amount of time.
C)recent changes in the law have allowed interest on checking.
D)their physical location is "near" the money.
9
Assuming a required 20 percent reserve ratio, a small bank which receives a cash deposit of $1,000 is in a position to lend out an extra:
A)$4,500
B)$3,000
C)$1,000
D)$800
10
The two main reasons why people hold their wealth as cash or money are referred to as the:
A)nominal demand and the real demand.
B)transactions demand and the real demand.
C)transactions demand and the asset demand.
D)cash demand and the transactions demand.





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