AP Macro: Money and Banking

The fact that money must withstand the wear and tear that comes from being used over and over again is a measure of its

• Portability
• Currency
• Durability
• Age

Money that can be easily divided into smaller units of value has the characteristic of

• Divisibility
• Denominations
• Exchange
• Durability

If Takeoff withdraws a $100 bill from his checking account and Quavo deposits another $100 bill in his savings account, by how much will M1 and M2 change?

• M1 will increase, and M2 will increase.

• Both M1 and M2 will remain the same.

• M1 will decrease, but M2 will remain the same.

• M2 will decrease by $100.

• M1 will remain the same, and M2 will increase.

Which of the following is an example of money as a unit of account?

• Purchasing a toy for $8.99
• Lending a friend $25.00
• Opening a savings account at a bank
• Checking the price of a camera at several stores before buying it at the lowest price

The coins and paper bills used as money in a society

• Prices
• Currency
• Bond
• Checks

An institution for receiving, keeping and lending money

• Bank
• Bond
• Stock
• Company

What is the price paid for the use of borrowed money?

• Principal
• Interest
• Default
• FDIC

When money is used to acquire goods and services, it is functioning as a

• Medium of exchange.

• Store of value.

• Standard of account.

• Equation of value.

Bradley digs out $50 from his cookie jar and deposits it in his checking account. The immediate result of this transaction is that M1 has

• Increased by $50.

• Increased by more than $50.

• Increased by less than $50.

• Not changed.

1/required reserve ratio determines the

• required reserves

• excess reserves

• lending capacity

• money multiplier