MACROECONOMICS - MONEY & BANKING

Commercial banks are primary financial depository institutions where the government will keep their money

• a) TRUE

• b) FALSE

Barter refers to the direct exchange of one good and service to another good and service.

• a) TRUE

• b) FALSE

M2 can be defined as

• a) M1 plus saving accounts

• b) M1 plus all types of deposits

• c) M1 plus narrow money

• d) M1 plus broad money

Central bank is owned and controlled by government

• a) TRUE

• b) FALSE

Money is defined as anything that acts as a medium of exchange

• a) TRUE

• b) FALSE

If George keeps a part of his earnings as cash in the safety deposit box, then he is employing money as

• a) a store of value

• b) a measure of value

• c) a medium of exchange

• d) none of the above

Barter trading will occur when there is

• a) singularity of interests

• b) bargaining intermediary

• c) double coincidence of wants

• d) sufficient supply of cash

A reduction in the required reserve ratio will cause

• a) an increase in the demand for money

• b) decrease in the discount rate

• c) decrease in the money supply

• d) an increase in excess reserves

M2 refers to a broader definition of money supply and consists of M1 and near money.

• a) TRUE

• b) FALSE

Coins in the people pockets are

• a) excluded from both M1 and M2

• b) included in both M1 and M2

• c) included in M1, but not in M2

• d) included in M2, but not in M1