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1 | ![](/olcweb/styles/shared/spacer.gif) | ![](/olcweb/styles/shared/spacer.gif) Money has 3 main functions, they are, _________, ____________ and _______________ |
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![](/olcweb/styles/shared/spacer.gif) | ![](/olcweb/styles/shared/spacer.gif) | A)![](/olcweb/styles/shared/spacer.gif) | IOU, inflation hedge, store of value |
![](/olcweb/styles/shared/spacer.gif) | ![](/olcweb/styles/shared/spacer.gif) | B)![](/olcweb/styles/shared/spacer.gif) | medium of exchange, inflation hedge, store of value |
![](/olcweb/styles/shared/spacer.gif) | ![](/olcweb/styles/shared/spacer.gif) | C)![](/olcweb/styles/shared/spacer.gif) | medium of exchange, unit of account, IOU |
![](/olcweb/styles/shared/spacer.gif) | ![](/olcweb/styles/shared/spacer.gif) | D)![](/olcweb/styles/shared/spacer.gif) | medium of exchange, unit of account, store of value |
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2 | ![](/olcweb/styles/shared/spacer.gif) | ![](/olcweb/styles/shared/spacer.gif) The primary function of a bank is to |
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![](/olcweb/styles/shared/spacer.gif) | ![](/olcweb/styles/shared/spacer.gif) | A)![](/olcweb/styles/shared/spacer.gif) | control the money supply |
![](/olcweb/styles/shared/spacer.gif) | ![](/olcweb/styles/shared/spacer.gif) | B)![](/olcweb/styles/shared/spacer.gif) | provide notes and coins for trade |
![](/olcweb/styles/shared/spacer.gif) | ![](/olcweb/styles/shared/spacer.gif) | C)![](/olcweb/styles/shared/spacer.gif) | make a profit |
![](/olcweb/styles/shared/spacer.gif) | ![](/olcweb/styles/shared/spacer.gif) | D)![](/olcweb/styles/shared/spacer.gif) | provide a cheque clearing system |
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3 | ![](/olcweb/styles/shared/spacer.gif) | ![](/olcweb/styles/shared/spacer.gif) Banks create money by |
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![](/olcweb/styles/shared/spacer.gif) | ![](/olcweb/styles/shared/spacer.gif) | A)![](/olcweb/styles/shared/spacer.gif) | printing it |
![](/olcweb/styles/shared/spacer.gif) | ![](/olcweb/styles/shared/spacer.gif) | B)![](/olcweb/styles/shared/spacer.gif) | issuing debit cards |
![](/olcweb/styles/shared/spacer.gif) | ![](/olcweb/styles/shared/spacer.gif) | C)![](/olcweb/styles/shared/spacer.gif) | accepting cheques |
![](/olcweb/styles/shared/spacer.gif) | ![](/olcweb/styles/shared/spacer.gif) | D)![](/olcweb/styles/shared/spacer.gif) | lending out part of their deposits |
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4 | ![](/olcweb/styles/shared/spacer.gif) | ![](/olcweb/styles/shared/spacer.gif) The money supply is ___________ |
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![](/olcweb/styles/shared/spacer.gif) | ![](/olcweb/styles/shared/spacer.gif) | A)![](/olcweb/styles/shared/spacer.gif) | the Bank of England Issue Department |
![](/olcweb/styles/shared/spacer.gif) | ![](/olcweb/styles/shared/spacer.gif) | B)![](/olcweb/styles/shared/spacer.gif) | money + bank cards +credit cards |
![](/olcweb/styles/shared/spacer.gif) | ![](/olcweb/styles/shared/spacer.gif) | C)![](/olcweb/styles/shared/spacer.gif) | Cheques + money + bank cards + credit cards |
![](/olcweb/styles/shared/spacer.gif) | ![](/olcweb/styles/shared/spacer.gif) | D)![](/olcweb/styles/shared/spacer.gif) | Currency in circulation plus bank deposits |
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5 | ![](/olcweb/styles/shared/spacer.gif) | ![](/olcweb/styles/shared/spacer.gif) If banks and the private sector decide to hold less cash the money multiplier will be __________ |
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![](/olcweb/styles/shared/spacer.gif) | ![](/olcweb/styles/shared/spacer.gif) | A)![](/olcweb/styles/shared/spacer.gif) | unchanged |
![](/olcweb/styles/shared/spacer.gif) | ![](/olcweb/styles/shared/spacer.gif) | B)![](/olcweb/styles/shared/spacer.gif) | larger |
![](/olcweb/styles/shared/spacer.gif) | ![](/olcweb/styles/shared/spacer.gif) | C)![](/olcweb/styles/shared/spacer.gif) | smaller |
![](/olcweb/styles/shared/spacer.gif) | ![](/olcweb/styles/shared/spacer.gif) | D)![](/olcweb/styles/shared/spacer.gif) | unstable |
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6 | ![](/olcweb/styles/shared/spacer.gif) | ![](/olcweb/styles/shared/spacer.gif) Three variables affect the demand for money; they are ___________, ___________ and ____________ |
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![](/olcweb/styles/shared/spacer.gif) | ![](/olcweb/styles/shared/spacer.gif) | A)![](/olcweb/styles/shared/spacer.gif) | bank opening hours, the proportion of weekly paid employees, interest rates |
![](/olcweb/styles/shared/spacer.gif) | ![](/olcweb/styles/shared/spacer.gif) | B)![](/olcweb/styles/shared/spacer.gif) | the price level, interest rates, real income |
![](/olcweb/styles/shared/spacer.gif) | ![](/olcweb/styles/shared/spacer.gif) | C)![](/olcweb/styles/shared/spacer.gif) | the time of year, bank opening hours, the price level |
![](/olcweb/styles/shared/spacer.gif) | ![](/olcweb/styles/shared/spacer.gif) | D)![](/olcweb/styles/shared/spacer.gif) | the proportion of weekly paid employees, the time of year, real income |
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7 | ![](/olcweb/styles/shared/spacer.gif) | ![](/olcweb/styles/shared/spacer.gif) If I keep some money available in case I see a bargain, this is an example of _____________ |
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![](/olcweb/styles/shared/spacer.gif) | ![](/olcweb/styles/shared/spacer.gif) | A)![](/olcweb/styles/shared/spacer.gif) | asset demand for money |
![](/olcweb/styles/shared/spacer.gif) | ![](/olcweb/styles/shared/spacer.gif) | B)![](/olcweb/styles/shared/spacer.gif) | transactions demand for money |
![](/olcweb/styles/shared/spacer.gif) | ![](/olcweb/styles/shared/spacer.gif) | C)![](/olcweb/styles/shared/spacer.gif) | token demand for money |
![](/olcweb/styles/shared/spacer.gif) | ![](/olcweb/styles/shared/spacer.gif) | D)![](/olcweb/styles/shared/spacer.gif) | precautionary demand for money |
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8 | ![](/olcweb/styles/shared/spacer.gif) | ![](/olcweb/styles/shared/spacer.gif) When interest rates rise, other things being equal, we can expect the quantity of real money holdings to _____________ |
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![](/olcweb/styles/shared/spacer.gif) | ![](/olcweb/styles/shared/spacer.gif) | A)![](/olcweb/styles/shared/spacer.gif) | fall |
![](/olcweb/styles/shared/spacer.gif) | ![](/olcweb/styles/shared/spacer.gif) | B)![](/olcweb/styles/shared/spacer.gif) | increase |
![](/olcweb/styles/shared/spacer.gif) | ![](/olcweb/styles/shared/spacer.gif) | C)![](/olcweb/styles/shared/spacer.gif) | not change |
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9 | ![](/olcweb/styles/shared/spacer.gif) | ![](/olcweb/styles/shared/spacer.gif) When real income increases, other things equal, we can expect the demand for real money holdings to ______________ |
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![](/olcweb/styles/shared/spacer.gif) | ![](/olcweb/styles/shared/spacer.gif) | A)![](/olcweb/styles/shared/spacer.gif) | fall |
![](/olcweb/styles/shared/spacer.gif) | ![](/olcweb/styles/shared/spacer.gif) | B)![](/olcweb/styles/shared/spacer.gif) | not change |
![](/olcweb/styles/shared/spacer.gif) | ![](/olcweb/styles/shared/spacer.gif) | C)![](/olcweb/styles/shared/spacer.gif) | increase |
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10 | ![](/olcweb/styles/shared/spacer.gif) | ![](/olcweb/styles/shared/spacer.gif) M4 is a _____________ measure of money and includes deposits at both _______ and ____________ |
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![](/olcweb/styles/shared/spacer.gif) | ![](/olcweb/styles/shared/spacer.gif) | A)![](/olcweb/styles/shared/spacer.gif) | narrow, banks, building societies |
![](/olcweb/styles/shared/spacer.gif) | ![](/olcweb/styles/shared/spacer.gif) | B)![](/olcweb/styles/shared/spacer.gif) | wide, banks, insurance companies |
![](/olcweb/styles/shared/spacer.gif) | ![](/olcweb/styles/shared/spacer.gif) | C)![](/olcweb/styles/shared/spacer.gif) | narrow, banks, insurance companies |
![](/olcweb/styles/shared/spacer.gif) | ![](/olcweb/styles/shared/spacer.gif) | D)![](/olcweb/styles/shared/spacer.gif) | wide, banks, building societies |
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11 | ![](/olcweb/styles/shared/spacer.gif) | ![](/olcweb/styles/shared/spacer.gif) The size of the money multiplier is determined by the marginal propensity to consume |
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![](/olcweb/styles/shared/spacer.gif) | ![](/olcweb/styles/shared/spacer.gif) | A)![](/olcweb/styles/shared/spacer.gif) | TRUE |
![](/olcweb/styles/shared/spacer.gif) | ![](/olcweb/styles/shared/spacer.gif) | B)![](/olcweb/styles/shared/spacer.gif) | FALSE |
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12 | ![](/olcweb/styles/shared/spacer.gif) | ![](/olcweb/styles/shared/spacer.gif) An increase in the price level will likely increase the demand for nominal money |
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![](/olcweb/styles/shared/spacer.gif) | ![](/olcweb/styles/shared/spacer.gif) | A)![](/olcweb/styles/shared/spacer.gif) | TRUE |
![](/olcweb/styles/shared/spacer.gif) | ![](/olcweb/styles/shared/spacer.gif) | B)![](/olcweb/styles/shared/spacer.gif) | FALSE |