1) An important reason why economies at an early stage of development tend to operate inefficiently is
a) they tend to be dominated by the agricultural sector, where productivity is usually low.
b) they tend to have authoritarian governments that stifle innovation.
c) they tend to be plagued by superstitious beliefs that stifle innovation.
d) the high transaction costs associated with barter.
2) In comparing money to shares of Apple stock, we can say that
a) money is a store of value, but shares of Apple stock are not.
b) shares of Apple stock are a store of value, but money is not.
c) both money and shares of Apple stock are stores value.
d) neither money nor shares of Apple stock are stores of value.
3) Suppose $100 buys less in the year 2011 than in 2000. Then we can say that.
a) money's store of value has decreased.
b) money's store of value has increased.
c) the economy must have been growing rapidly between 200 and 2011.
d) the economy must have been growing slowly between 2000 and 2011.
4) In what sense do self-fulfilling expectations determine the acceptability of a medium of exchange?
a) People like to do what the government expect them to do
b) People value something as money only if they believe other will accept it from them as payment.
c) People expect that money will never lose its value.
d) People expect that eventually every country will use the same medium of exchange
5) What is the most important factor for Federal Reserve currency to be accepted as money?
a) Its acceptance by businesses and households in the United States in exchange for goods and services
b) Its designation as legal tender by the federal government.
c) The willingness of the federal government to accept it in exchange for an equivalent amount of gold or silver coins.
d) The willingness of foreign businesses and banks to accept it in exchange for goods and services.
6) According to the equation of exchange, how can national income grow even though the amount of money does not?
a) price level remains constant.
b) real GDP decrease
c) velocity increases
d) velocity decreases
7) Which country experiencing hyperinflation in excess of 15 billion percent in 2008?
a) Argentina
b) Canada
c) Iceland
d) Zimbabwe
8) Research has shown that nations with highly independent central banks tend to have low
a) inflation.
b) interest rates.
c) economic growth.
d) unemployment.
9) The Crime of 1873 was a so-called crime against
a) the gold interest
b) the silver interest
c) the fiat money interest
d) the federal government
10) The M2 aggregate
a) includes M1 plus short term investment accounts.
b) includes M1 plus large-denomination time deposits.
c) equals currency plus checking account deposits at commercial banks.
d) is the best definition of money purely as a medium of exchange.
11) The fed's current position towards the existing monetary aggregates is
a) it is convinced that M1 is the best measure of the money supply
b) it is convinced that M2 is the best measure of the money supply
c) it is an issue of ongoing research
d) it is reverting to considering currency alone as the best measure of the money supply
12) Approximately what proportion of US dollars are held outside the United States?
a) less than one-tenth
b) one-fourth
c) one-half
d) two thirds
13) The payments system is
a) the mechanism for conduction economic transactions.
b) another name for the system of foreign exchange rates.
c) the phrase used to describe how transactions are carried out in an economy that does not use money.
d) the way in which economic transaction are carried out in a governmetn-controlled economy, such the former Soviet Union.