Money October 2024_2nd part

Using money as a mechanism for transforming current income into future purchases is referred to as the

• medium of exchange

• store of value

• standard of deferred payment

• standard of value

What is fiat money?

• Money that has intrinsic value

• Money that is backed by gold or silver

• Money that is declared legal tender by a government but has no intrinsic value

• Money that is only used in foreign exchange markets

What is the primary function of money?

• a medium of exchange

• a store of value

• a unit of account

• all of the above

Which of the following is not the function of money?

• Durability

• Portability

• Divisibility

• Complexity

What does M1 money supply include?

• Currency in circulation and checkable deposits

• Savings accounts and time deposits

• Money market mutual funds and savings accounts

• All forms of money including stocks and bonds

What does the LM curve represent

• Equilibrium in the goods market

• Equilibrium in the money market

• The relationship between consumption and investment

• The relationship between government spending and taxation

Which factor causes the LM curve to shift to the right

• Increase in price level

• Decrease in expected inflation

• Increase in the nominal interest rate on money

• Increase in the nominal money supply

  If people expect higher inflation, what is the likely impact on the demand for money?

• It increases

• It decreases

• It remains unchanged

•  It fluctuates unpredictably

What is the nominal interest rate

• Interest rate adjusted for inflation

•  

  Interest rate before adjusting for inflation

• Interest rate accounting for taxes

• Interest rate set by commercial banks

What does the nominal money supply refer to

• Total amount of money adjusted for inflation

• Total amount of money in real terms

•  

  Total amount of money in an economy at current prices

• Total amount of foreign currency in an economy