Free Essay

Tb Mishkin Econmoneybankingfinmarket9E

In: Business and Management

Submitted By hazemdabbaghh
Words 547
Pages 3
Money, according to our definition,
A. has to be backed by something valuable, such as gold or silver.
B. does not have to be generally accepted in payment of obligations.
C. can include credit.
D. has to be issued by government.
E. none of the above

Money, according to our definition,
A. need not be in common use.
B. is generally accepted to pay debt.
C. has to be issued by government.
D. does not need to be useful to pay off obligations.
E. needs to be backed up by gold.

Which of the following is not a function of money
A. Unit of Account
B. Medium of Exchange (Means of Payment)
C. Store of Value
D. Provider of Peace and Security
E. Standard of Deferred Payments

M1 money in our society includes
A vault cash of commercial banks
B. cash held by private citizens
C. deposits of commercial banks in the Federal Reserve Bank
D. saving account deposits of private citizens and businesses in banking institutions
E. U.S. Government bonds

The M1 definition of money in our society includes
A. bonds held by the public B. checking account deposits
C. cash in the vaults of banks
D. deposits of banks at the Fed
e. savings accounts

Nobody likes high interest rates. One governmental official says that the government can keep interest rates down by putting lots of money into circulation. What do you think of this idea?
A. It will work. More money in circulation will immediately lead to lower interest rates.
B. It won't work. More money in circulation will have the immediate effect of raising interest rates.
C. It won't work. Money has no effect on interest rates.
D. It won't work. More money in circulation will lower interest rates for a short time, but the inflation caused by the additional money will eventually increase interest rates.
E. It will work (in the long run). More money in circulation will raise interest rates for a short time, but will decrease interest rates eventually.

A “tight” or restrictive monetary policy is when
A. the Fed reduces the discount rate.
B. the Fed increases the money supply or its growth rate.
C. the Fed reduces the money supply or its growth rate.
D. the Fed attempts to reduce interest rates, short term.
E. the Fed buys bonds on the open market.

The interest rate is determined by
A. the supply of and demand for loans.
B. the ratio of consumers to producers in the economy.
C. the ratio of savers to lenders in the economy.
D. the ratio of consumption to saving in the economy.
E. the supply of resources in the economy.

The interest rate is determined by
A. the ratio of savers to lenders in the economy.
B. the ratio of consumption to saving in the economy.
C. the supply of resources in the economy.
D. the supply of and demand for loans.
E. the government.

Ceteris paribus, as the price of goods and services rise, buyers of goods will have to borrow more money to make purchases. This will tend to
A. lower interest rates.
B. raise interest rates.
C. increase the demand for goods and services.
D. increase the supply of goods and services.
E. increase the supply of loans.

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