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| 1 | |
Money has 3 main functions, they are: _________, ____________ and ___________. |
| | A) | IOU, inflation hedge, store of value |
| | B) | Medium of exchange, inflation hedge, store of value |
| | C) | Medium of exchange, unit of account, IOU |
| | D) | Medium of exchange, unit of account, store of value |
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| 2 | |
A _____________ has no medium of exchange. Goods are swapped for other goods. |
| | A) | barter economy |
| | B) | developing economy |
| | C) | basic economy |
| | D) | social economy |
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| 3 | |
The skill in running a bank entails being able to judge how much must be held in liquid assets , and how much can be lent out in more liquid forms that earn higher interest rates. |
| | A) | True |
| | B) | False |
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| 4 | |
The problem with barter is that you must find someone who has the goods you want and who wants the goods you have; this is known as _______ . |
| | A) | joint supply |
| | B) | joint demand |
| | C) | a double coincidence of wants |
| | D) | joint utility |
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| 5 | |
If the private sector’s desired ratio of cash to bank deposits is 0.5 and the banks’ desired cash reserve ratio is 0.1, then the money multiplier is: |
| | A) | 1 |
| | B) | 2.5 |
| | C) | 5 |
| | D) | 10 |
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| 6 | |
A fall in either the banks’ desired ____________ or the private sector’s desired _______________ raises the money multiplier. |
| | A) | cash reserves ratio, ratio of cash to bank deposits |
| | B) | bond reserves ratio, ratio of cash to bank deposits |
| | C) | bond reserves ratio, ratio of overdrafts to bank deposits |
| | D) | cash reserves ratio, ratio of overdrafts to bank deposits |
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| 7 | |
M0, M1, M2, M3 and M4 are all: |
| | A) | motorways |
| | B) | radio stations |
| | C) | tax forms |
| | D) | measures of money supply |
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| 8 | |
The ____________ is the value of the stock of the medium of exchange in circulation. |
| | A) | total supply |
| | B) | aggregate supply |
| | C) | money supply |
| | D) | excess supply |
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| 9 | |
The interest rate spread is the excess of the ______interest rate over the ________ interest rate. |
| | A) | loan, deposit |
| | B) | loan, mortgage |
| | C) | mortgage, deposit |
| | D) | deposit, loanv |
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| 10 | |
The primary function of a bank is to : |
| | A) | Control the money supply. |
| | B) | Provide notes and coins for trade. |
| | C) | Make a profit . |
| | D) | Provide a cheque clearing system. |
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| 11 | |
Banks create money by: |
| | A) | printing it. |
| | B) | issuing debit cards. |
| | C) | accepting cheques. |
| | D) | lending out part of their deposits. |
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| 12 | |
The size of the money multiplier is determined by the marginal propensity to consume. |
| | A) | True |
| | B) | False |
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| 13 | |
The money supply is ___________. |
| | A) | the Bank of England Issue Department |
| | B) | money + bank cards +credit cards |
| | C) | Cheques + money + bank cards + credit cards |
| | D) | Currency in circulation plus bank deposits |
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| 14 | |
If banks and the private sector decide to hold less cash the money multiplier will be __________. |
| | A) | unchanged |
| | B) | larger |
| | C) | smaller |
| | D) | unstable |
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| 15 | |
Three variables affect the demand for money; they are ___________, ___________ and ____________. |
| | A) | bank opening hours, the proportion of weekly paid employees, interest rates |
| | B) | the price level, interest rates, real income |
| | C) | the time of year, bank opening hours, the price level |
| | D) | the proportion of weekly paid employees, the time of year, real income |
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| 16 | |
If I keep some money available in case I see a bargain, this is an example of _____________. |
| | A) | asset demand for money |
| | B) | transactions demand for money |
| | C) | token demand for money |
| | D) | precautionary demand for money |
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| 17 | |
An increase in the price level will likely increase the demand for nominal money. |
| | A) | True |
| | B) | False |
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| 18 | |
When interest rates rise, other things equal, we can expect the quantity of real money holdings to _____________. |
| | A) | fall |
| | B) | increase |
| | C) | not change |
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| 19 | |
When real income increases, other things equal, we can expect the demand for real money holdings to ______________. |
| | A) | fall |
| | B) | not change |
| | C) | increase |
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| 20 | |
M4 is a _____________ measure of money and includes deposits at both _______ and ____________. |
| | A) | narrow, banks, building societies |
| | B) | wide, banks, insurance companies |
| | C) | narrow, banks, insurance companies |
| | D) | wide, banks, building societies |
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