The Monetary System

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Chapter 29
The Monetary System

TRUE/FALSE

1.In an economy that relies on barter, trade requires a double-coincidence of wants. ANS:TDIF:1REF:29-0
NAT:AnalyticLOC:The role of moneyTOP:Barter
MSC:Definitional

2.Joe wants to trade eggs for sausage. Lashonda wants to trade sausage for eggs. Joe and Lashonda have a double-coincidence of wants. ANS:TDIF:1REF:29-0
NAT:AnalyticLOC:The role of moneyTOP:Barter
MSC:Definitional

3.The use of money allows trade to be roundabout.
ANS:TDIF:1REF:29-0
NAT:AnalyticLOC:The role of moneyTOP:Money | Trade
MSC:Definitional

4.Roundabout trade is beneficial for an economy.
ANS:TDIF:1REF:29-0
NAT:AnalyticLOC:The role of moneyTOP:Money | Trade
MSC:Definitional

5.Money allows people to specialize in what they do best, thereby raising everyone’s standard of living. ANS:TDIF:2REF:29-0
NAT:AnalyticLOC:The role of moneyTOP:Money
MSC:Interpretive

6.When money functions as a unit of account, then it cannot be commodity money. ANS:FDIF:2REF:29-1
NAT:AnalyticLOC:The role of moneyTOP:Money
MSC:Interpretive

7.Demand deposits are balances in bank accounts that depositors can access by writing a check. ANS:TDIF:1REF:29-1
NAT:AnalyticLOC:The role of moneyTOP:Demand deposits
MSC:Definitional

8.According to economists, a collection of valuable jewels is not money. ANS:TDIF:2REF:29-1
NAT:AnalyticLOC:The Study of economics, and the definitions of economics TOP:MoneyMSC:Interpretive

9.A debit card is more similar to a credit card than to a check. ANS:FDIF:2REF:29-1
NAT:AnalyticLOC:The Study of economics, and the definitions of economics TOP:MoneyMSC:Interpretive

10.Gary's wealth is $1 million. Economists would say that Gary has $1 million worth of money. ANS:FDIF:1REF:29-1
NAT:AnalyticLOC:The role of moneyTOP:Money
MSC:Definitional

11.Marc puts prices on surfboards and skateboards at his sporting goods store. He is using money as a unit of account. ANS:TDIF:1REF:29-1
NAT:AnalyticLOC:The role of moneyTOP:Money
MSC:Definitional

12.Sandra routinely uses currency to purchase her groceries. She is using money as a unit of account. ANS:FDIF:1REF:29-1
NAT:AnalyticLOC:The role of moneyTOP:Money
MSC:Definitional

13.Bottles of very fine wine are less liquid than demand deposits. ANS:TDIF:1REF:29-1
NAT:AnalyticLOC:The role of moneyTOP:Liquidity
MSC:Interpretive

14.U.S. dollars are an example of commodity money and hides used to make trades are an example of fiat money. ANS:FDIF:1REF:29-1
NAT:AnalyticLOC:The role of moneyTOP:Commodity money
MSC:Definitional

15.When the Soviet Union began breaking up in the late 1980s, cigarettes began replacing the ruble as the medium of exchange even though the ruble was legal tender. The cigarettes provide an example of fiat money. ANS:FDIF:1REF:29-1

NAT:AnalyticLOC:The role of moneyTOP:Commodity money
MSC:Interpretive

16.In order for currency to be widely used as a medium of exchange, it is sufficient for the government to designate it as legal tender. ANS:FDIF:1REF:29-1
NAT:AnalyticLOC:The role of moneyTOP:Currency
MSC:Definitional

17.M1 includes savings deposits.
ANS:FDIF:1REF:29-1
NAT:AnalyticLOC:The role of moneyTOP:Money supply
MSC:Definitional

18.M2 is both larger and more liquid than M1.
ANS:FDIF:1REF:29-1
NAT:AnalyticLOC:The role of moneyTOP:Money supply | Liquidity MSC:Interpretive

19.Credit cards are a medium of exchange.
ANS:FDIF:2REF:29-1
NAT:AnalyticLOC:The role of moneyTOP:Medium of exchange MSC:Definitional

20.The series of bank failures in 1907 occurred despite the creation of the Federal Reserve many years earlier. ANS:FDIF:1REF:29-2
NAT:AnalyticLOC:The role of moneyTOP:Federal Reserve System MSC:Interpretive

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