Question 1

Money is used as a _____ because it provides a yardstick for measuring and comparing the values of a wide variety of goods and services.

Accepted Answer

A)   medium of exchange
B)   unit of account
C)   store of value
D)   barter instrument

Question 2

Student loans funded by the government typically offer _____ interest rates than similar bank loans and _____.

Accepted Answer

A)   higher; can be paid back later
B)   higher; must be paid back earlier
C)   lower; can be paid back later
D)   lower; must be paid back earlier

Question 3

Mortgage debt is a type of short-term debt.

Accepted Answer

A) True 
 B)False

Question 4

Which is an example of money being used as a unit of account?

Accepted Answer

A)   A customer buys a burger, fries, and a medium diet cola for $6.95.
B)   A restaurant's profits for the week of October 3 to October 10 are $1,250.
C)   A customer receives $3.05 in change and returns the next day to make another purchase.
D)   A restaurant sells a large ice cream sundae and charges the customer's debit card.

Question 5

In shareholder meetings, a shareholder gets one vote for each share of stock he or she owns.

Accepted Answer

A) True 
 B)False

Question 6

Which list correctly names money's functions?

Accepted Answer

A)   a unit of account, a store of value, a medium of exchange
B)   barter, a double coincidence of wants, a unit of account
C)   transaction costs, a medium of exchange, a unit of account
D)   liquidity, barter, a medium of exchange

Question 7

Currency is approximately 50% of M1.

Accepted Answer

A) True 
 B)False

Question 8

Joan begins the month with $100 in her checking account. When she receives a pay check for $1,200 on the 5th of the month, she uses that pay check to put $1,000 in her checking account, takes $80 in cash, and deposits $120 in her savings account. During the month, she spends $550 on rent and utilities, $30 on household items, $10 on a T-shirt, and $350 on food, leaving a balance of $240 in her checking account. Based on the given information, which statement is true?

Accepted Answer

A)   The $100 and then $220 in Joan's savings account is part of M1.
B)   When Joan deposits her pay check and receives cash, M1 falls by $120.
C)   Joan's deposit into her checking account increases M1 by $1,000.
D)   M1 falls as Joan spends her money.

Question 9

Establishment of new government regulations that reduce corruption and instill confidence in firms and entrepreneurs tends to lead to higher interest rates.

Accepted Answer

A) True 
 B)False

Question 10

Assume initially that market interest rates are 7% and the bondholder is receiving a $70 coupon payment per year on a bond with a face value of $1,000. If market interest rates rise to 8%, the bond price:

Accepted Answer

A)   falls to $875.
B)   falls to $800.
C)   rises to $1,125.
D)   falls to $700.

Question 11

Which statement is NOT true?

Accepted Answer

A)   The supply of loanable funds comes from saving.
B)   Saving behavior is a cultural phenomenon.
C)   The reward for not spending today is the interest received on saving.
D)   The supply of funds to the loanable funds market is inversely related to the interest rate.

Question 12

As the real interest rate falls:

Accepted Answer

A)   the supply of loanable funds increases.
B)   the supply of loanable funds decreases.
C)   the quantity supplied of loanable funds decreases.
D)   more saving is supplied to the market.

Question 13

To say that interest rates represent the opportunity cost of holding money means that as interest rates rise:

Accepted Answer

A)   the demand for money shifts to the left.
B)   the demand for money shifts to the right.
C)   there is a movement upward along the demand curve for money.
D)   there is a movement downward along the demand curve for money.

Question 14

The Federal Reserve System measures the money supply in the United States.

Accepted Answer

A) True 
 B)False

Question 15

Who will pay off a deferment on a college loan?

Accepted Answer

A)   the federal government
B)   the student's parents or relatives
C)   the student at a later date
D)   It will not have to be paid off at all.

Question 16

Yolanda took $5,000 from her checking account and put the money in her savings account at the same bank. Based on that information, which of these is true?

Accepted Answer

A)   Both M1 and M2 were reduced by $5,000.
B)   M1 went down by $5,000, but M2 was unchanged.
C)   Neither M1 nor M2 changed because the transfer was done at the same bank.
D)   M1 and M2 both rose by $5,000.

Question 17

In the market for loanable funds, what can cause a rise in interest rates?

Accepted Answer

A)   demand shifting right only
B)   supply shifting right only
C)   supply shifting left and demand shifting right
D)   supply shifting right and demand shifting right

Question 18

Which one of these will cause the supply of loanable funds curve to shift rightward?

Accepted Answer

A)   an improvement in firms' expectations about the economy
B)   technological advances that result in new products
C)   a perceived peak in an asset index (for example, the Dow Jones Industrial Average) 
D)   an increase in the government deficit

Question 19

If Jack Sparrow uses a chest of pieces of eight to buy a ship, then the gold is functioning as a:

Accepted Answer

A)   unit of account.
B)   store of value.
C)   medium of exchange.
D)   barter.

Question 20

Which source of short-term borrowing charges the highest average interest rates on unpaid balances?

Accepted Answer

A)   ordinary credit cards
B)   car loans for borrowers with good credit
C)   home mortgage loans
D)   student loans

Exam 11: Saving, Investment, and the Financial System

Who will pay off a deferment on a college loan?

Correct Answer
verified

Which statement is NOT true?

Correct Answer
verified

Mortgage debt is a type of short-term debt.

Correct Answer
verified

Establishment of new government regulations that reduce corruption and instill confidence in firms and entrepreneurs tends to lead to higher interest rates.

Correct Answer
verified

Which list correctly names money's functions?

Correct Answer
verified

Student loans funded by the government typically offer _ interest rates than similar bank loans and _.

Correct Answer
verified

Assume initially that market interest rates are 7% and the bondholder is receiving a $70 coupon payment per year on a bond with a face value of $1,000. If market interest rates rise to 8%, the bond price:

Correct Answer
verified

As the real interest rate falls:

Correct Answer
verified

Currency is approximately 50% of M1.

Correct Answer
verified

In the market for loanable funds, what can cause a rise in interest rates?

Correct Answer
verified

If Jack Sparrow uses a chest of pieces of eight to buy a ship, then the gold is functioning as a:

Correct Answer
verified

To say that interest rates represent the opportunity cost of holding money means that as interest rates rise:

Correct Answer
verified

The Federal Reserve System measures the money supply in the United States.

Correct Answer
verified

Money is used as a _____ because it provides a yardstick for measuring and comparing the values of a wide variety of goods and services.

Correct Answer
verified

Which source of short-term borrowing charges the highest average interest rates on unpaid balances?

Correct Answer
verified

Which one of these will cause the supply of loanable funds curve to shift rightward?

Correct Answer
verified

In shareholder meetings, a shareholder gets one vote for each share of stock he or she owns.

Correct Answer
verified

Correct Answer
verified

Yolanda took $5,000 from her checking account and put the money in her savings account at the same bank. Based on that information, which of these is true?

Correct Answer
verified

Which is an example of money being used as a unit of account?

Correct Answer
verified

Exam 11: Saving, Investment, and the Financial System

Who will pay off a deferment on a college loan?

Correct AnswerverifiedShow Answer

Which statement is NOT true?

Correct AnswerverifiedShow Answer

Mortgage debt is a type of short-term debt.

Correct AnswerverifiedShow Answer

Establishment of new government regulations that reduce corruption and instill confidence in firms and entrepreneurs tends to lead to higher interest rates.

Correct AnswerverifiedShow Answer

Which list correctly names money's functions?

Correct AnswerverifiedShow Answer

Student loans funded by the government typically offer _____ interest rates than similar bank loans and _____.

Correct AnswerverifiedShow Answer

Assume initially that market interest rates are 7% and the bondholder is receiving a $70 coupon payment per year on a bond with a face value of $1,000. If market interest rates rise to 8%, the bond price:

Correct AnswerverifiedShow Answer

As the real interest rate falls:

Correct AnswerverifiedShow Answer

Currency is approximately 50% of M1.

Correct AnswerverifiedShow Answer

In the market for loanable funds, what can cause a rise in interest rates?

Correct AnswerverifiedShow Answer

If Jack Sparrow uses a chest of pieces of eight to buy a ship, then the gold is functioning as a:

Correct AnswerverifiedShow Answer

To say that interest rates represent the opportunity cost of holding money means that as interest rates rise:

Correct AnswerverifiedShow Answer

The Federal Reserve System measures the money supply in the United States.

Correct AnswerverifiedShow Answer

Money is used as a _____ because it provides a yardstick for measuring and comparing the values of a wide variety of goods and services.

Correct AnswerverifiedShow Answer

Which source of short-term borrowing charges the highest average interest rates on unpaid balances?

Correct AnswerverifiedShow Answer

Which one of these will cause the supply of loanable funds curve to shift rightward?

Correct AnswerverifiedShow Answer

In shareholder meetings, a shareholder gets one vote for each share of stock he or she owns.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Yolanda took $5,000 from her checking account and put the money in her savings account at the same bank. Based on that information, which of these is true?

Correct AnswerverifiedShow Answer

Which is an example of money being used as a unit of account?

Correct AnswerverifiedShow Answer

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Student loans funded by the government typically offer _ interest rates than similar bank loans and _.

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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