Ch 34 and 35

Money functions as

• a store of value.

• a unit of account.

• a medium of exchange.

• a store of value, a unit of account, and a medium of exchange.

To say "money is what money does" means that

• money has been defined in a Constitutional amendment.

• whatever performs the functions of money extremely well is considered to be money.

• the money supply includes all public and private securities purchased by society.

• society, acting through Congress, specifies what shall be included in the money supply.

Purchasing groceries using a debit card best exemplifies money serving as a

• store of value.

• unit of account.

• medium of exchange.

• index of satisfaction.

Checkable deposits are classified as money because

• they can be readily used in purchasing goods and paying debts.

• banks hold currency equal to the value of their checkable deposits.

• they are ultimately the obligations of the Treasury.

• they earn interest income for the depositor.

The M2 money supply includes

• stock certificates.

• currency in bank vaults.

• the cash value of life insurance policies.

• individual shares in money market mutual funds.

A $20 bill is a

• gold certificate.

• Treasury note.

• Treasury bill.

• Federal Reserve note..

The value of money varies

• inversely with the price level.

• directly with the volume of employment.

• directly with the price level.

• directly with the interest rate.

The goldsmith's ability to create money was based on the fact that

• withdrawals of gold tended to exceed deposits of gold in any given time period.

• consumers and merchants preferred to use gold for transactions, rather than paper money.

• the goldsmith was required to keep 100 percent gold reserves.

• paper money in the form of gold receipts was rarely redeemed for gold.

Which one of the following is presently a major deterrent to bank panics in the United States?

• the legal reserve requirement

• the fractional reserve system

• the gold standard

• deposit insurance

The three main tools of monetary policy are

• interest on reserve balances, open-market operations, and changing the federal funds rate.

• 
  tax-rate changes, changes in government expenditures, and open-market operations.

• open-market operations, forward guidance, and changing the administered interest rates.

• changes in government expenditures, changing the discount rate, and forward guidance.