Question 1

Which of the following statements correctly differentiates between commodity money and fiat money?

Accepted Answer

A)  Commodity money is created by the government while fiat money is created in the private sector.
B)  Fiat money is created by the government while commodity money is created by the government.
C)  Commodity money can be used for transactions in the international market, while fiat money cannot be used for transactions in the international market.
D)  Fiat money has value decreed by the government, while commodity money is valued because of the material it is made of.

Question 2

Describe the difference between inside money and outside money, and explain whether each of the following items represent inside money or outside money:
a.Checking accounts
b.Coins
c.Travelers checks
d.Money-market mutual funds
e.$100 bills

Accepted Answer

Inside money is created by the private s...

Question 3

Why did M1 grow so rapidly in the early 1990s, whereas M2 did not?

Accepted Answer

M1 grew rapidly because of demand for U....

Question 4

Higher the rate of inflation​

Accepted Answer

A)  slower will be the rate at which money will lose value.
B)  lower will be the will to spend money.
C)  ​lower will be the will to hold money.
D)  ​lower will be the will to invest money.

Question 5

M1 consists of

Accepted Answer

A)  coins, paper currency, and travelers checks.
B)  coins, paper currency, travelers checks, and amounts in checking accounts.
C)  coins, paper currency, travelers checks, and amounts in checking accounts and savings accounts.
D)  coins, paper currency, travelers checks, and amounts in checking accounts and retail money-market mutual funds.

Question 6

Another name for commodity money is

Accepted Answer

A)  fiat money.
B)  glitter money.
C)  full-bodied money.
D)  inside money.

Question 7

A bill is introduced into Congress proposing that the U.S.go back to the gold standard, in which only gold coins could circulate as money.What are the major drawbacks of such a proposal?

Accepted Answer

The major drawbacks are that the governm...

Exam 3: Money and Payments

Higher the rate of inflation

Correct Answer
verified

Why did M1 grow so rapidly in the early 1990s, whereas M2 did not?

Correct Answer
verified
M1 grew rapidly because of demand for U....
View Answer

Describe the difference between inside money and outside money, and explain whether each of the following items represent inside money or outside money: a.Checking accounts b.Coins c.Travelers checks d.Money-market mutual funds e.$100 bills

Correct Answer
verified
Inside money is created by the private s...
View Answer

M1 consists of

Correct Answer
verified

A bill is introduced into Congress proposing that the U.S.go back to the gold standard, in which only gold coins could circulate as money.What are the major drawbacks of such a proposal?

Correct Answer
verified
The major drawbacks are that the governm...
View Answer

Another name for commodity money is

Correct Answer
verified

Which of the following statements correctly differentiates between commodity money and fiat money?

Correct Answer
verified

Exam 3: Money and Payments

Higher the rate of inflation​

Correct AnswerverifiedShow Answer

Why did M1 grow so rapidly in the early 1990s, whereas M2 did not?

Correct AnswerverifiedM1 grew rapidly because of demand for U....View AnswerShow Answer

Describe the difference between inside money and outside money, and explain whether each of the following items represent inside money or outside money: a.Checking accounts b.Coins c.Travelers checks d.Money-market mutual funds e.$100 bills

Correct AnswerverifiedInside money is created by the private s...View AnswerShow Answer

M1 consists of

Correct AnswerverifiedShow Answer

A bill is introduced into Congress proposing that the U.S.go back to the gold standard, in which only gold coins could circulate as money.What are the major drawbacks of such a proposal?

Correct AnswerverifiedThe major drawbacks are that the governm...View AnswerShow Answer

Another name for commodity money is

Correct AnswerverifiedShow Answer

Which of the following statements correctly differentiates between commodity money and fiat money?

Correct AnswerverifiedShow Answer

Higher the rate of inflation

Correct Answer
verified

Correct Answer
verified
M1 grew rapidly because of demand for U....
View Answer

Correct Answer
verified
Inside money is created by the private s...
View Answer

Correct Answer
verified

Correct Answer
verified
The major drawbacks are that the governm...
View Answer

Correct Answer
verified

Correct Answer
verified