Question 1

When money prices are used to facilitate comparisons of value, money is said to function as a ________.

Accepted Answer

A)   unit of account
B)   medium of exchange
C)   store of value
D)   payments-system ruler

Question 2

Explain how cigarettes could be called "money" in prisoner-of-war camps of World War II.

Accepted Answer

The cigarettes performed the three funct...

Question 3

A smart card is the equivalent of ________.

Accepted Answer

A)   cash
B)   savings bonds
C)   savings deposits
D)   certificates of deposit

Question 4

Whatever a society uses as money, the distinguishing characteristic is that it must ________.

Accepted Answer

A)   be completely inflation proof
B)   be generally acceptable as payment for goods and services or in the repayment of debt
C)   contain gold
D)   be produced by the government

Question 5

If an individual redeems a Canada savings bond for currency, ________.

Accepted Answer

A)   M1+ stays the same and M2 decreases
B)   M1+ increases and M2 increases
C)   M1+ increases and M2 stays the same
D)   M1+ stays the same and M2 stays the same

Question 6

If there are five goods in a barter economy, one needs to know ten prices in order to exchange one good for another. If, however, there are ten goods in a barter economy, then one needs to know ________ prices in order to exchange one good for another.

Accepted Answer

A)   20
B)   25
C)   30
D)   45

Question 7

A fall in the level of prices ________.

Accepted Answer

A)   does not affect the value of money
B)   has an uncertain effect on the value of money
C)   increases the value of money
D)   reduces the value of money

Question 8

The M1+ measure of money includes ________.

Accepted Answer

A)   small denomination time deposits
B)   chequable deposits
C)   money market deposit accounts
D)   money market mutual fund shares

Question 9

As a store of value, money ________.

Accepted Answer

A)   does not earn interest
B)   cannot be a durable asset
C)   must be currency
D)   is a way of saving for future purchases

Question 10

If an individual redeems a Canada savings bond for currency, ________.

Accepted Answer

A)   M1+ stays the same and M2++ decreases
B)   M1+ increases and M2++ increases
C)   M1+ increases and M2++ stays the same
D)   M1+ stays the same and M2++ stays the same

Question 11

Dennis notices that jackets are on sale for $99. In this case money is functioning as a ________.

Accepted Answer

A)   medium of exchange
B)   unit of account
C)   store of value
D)   payments-system ruler

Question 12

The total collection of pieces of property that serve to store value is a person's ________.

Accepted Answer

A)   wealth
B)   income
C)   money
D)   credit

Question 13

Money is ________.

Accepted Answer

A)   anything that is generally accepted in payment for goods and services or in the repayment of debt
B)   a flow of earnings per unit of time
C)   the total collection of pieces of property that are a store of value
D)   always based on a precious metal like gold or silver

Question 14

________ is a flow of earnings per unit of time.

Accepted Answer

A)   Income
B)   Money
C)   Wealth
D)   Currency

Question 15

During the past two decades an important characteristic of the modern payments system has been the rapidly increasing use of ________.

Accepted Answer

A)   cheques and decreasing use of currency
B)   electronic payments
C)   commodity monies
D)   fiat money

Question 16

All of the following are necessary criteria for a commodity to function as money except ________.

Accepted Answer

A)   it must deteriorate quickly
B)   it must be divisible
C)   it must be easy to carry
D)   it must be widely accepted

Question 17

When paper currency is decreed by governments as legal tender, legally it must be ________.

Accepted Answer

A)   paper currency backed by gold
B)   a precious metal such as gold or silver
C)   accepted as payment for debts
D)   convertible into an electronic payment

Question 18

If there are four goods in a barter economy, then one needs to know ________ prices in order to exchange one good for another.

Accepted Answer

A)   8
B)   6
C)   5
D)   4

Question 19

In the money index used by the Bank of Canada: M = X1 + X2 + ... + Xn, the n monetary components have ________.

Accepted Answer

A)   a weight of 1/n
B)   different weights
C)   a weight of n
D)   a weight of 1

Question 20

In explaining the evolution of money, ________.

Accepted Answer

A)   government regulation is the most important factor
B)   commodity money, because it is valued more highly, tends to drive out paper money
C)   new forms of money evolve to lower transaction costs
D)   paper money is always backed by gold and therefore more desirable than cheques

Exam 3: What Is Money

A smart card is the equivalent of ________.

Correct AnswerverifiedShow Answer

In the money index used by the Bank of Canada: M = X1 + X2 + ... + Xn, the n monetary components have ________.

Correct AnswerverifiedShow Answer

If an individual redeems a Canada savings bond for currency, ________.

Correct AnswerverifiedShow Answer

During the past two decades an important characteristic of the modern payments system has been the rapidly increasing use of ________.

Correct AnswerverifiedShow Answer

All of the following are necessary criteria for a commodity to function as money except ________.

Correct AnswerverifiedShow Answer

A fall in the level of prices ________.

Correct AnswerverifiedShow Answer

Whatever a society uses as money, the distinguishing characteristic is that it must ________.

Correct AnswerverifiedShow Answer

________ is a flow of earnings per unit of time.

Correct AnswerverifiedShow Answer

Money is ________.

Correct AnswerverifiedShow Answer

In explaining the evolution of money, ________.

Correct AnswerverifiedShow Answer

If an individual redeems a Canada savings bond for currency, ________.

Correct AnswerverifiedShow Answer

If there are five goods in a barter economy, one needs to know ten prices in order to exchange one good for another. If, however, there are ten goods in a barter economy, then one needs to know ________ prices in order to exchange one good for another.

Correct AnswerverifiedShow Answer

Explain how cigarettes could be called "money" in prisoner-of-war camps of World War II.

Correct AnswerverifiedThe cigarettes performed the three funct...View AnswerShow Answer

As a store of value, money ________.

Correct AnswerverifiedShow Answer

The M1+ measure of money includes ________.

Correct AnswerverifiedShow Answer

When money prices are used to facilitate comparisons of value, money is said to function as a ________.

Correct AnswerverifiedShow Answer

If there are four goods in a barter economy, then one needs to know ________ prices in order to exchange one good for another.

Correct AnswerverifiedShow Answer

Dennis notices that jackets are on sale for $99. In this case money is functioning as a ________.

Correct AnswerverifiedShow Answer

When paper currency is decreed by governments as legal tender, legally it must be ________.

Correct AnswerverifiedShow Answer

The total collection of pieces of property that serve to store value is a person's ________.

Correct AnswerverifiedShow Answer

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In the money index used by the Bank of Canada: M = X₁+ X₂+ ... + X_n, the n monetary components have ________.

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The cigarettes performed the three funct...
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