Functions of Money Quiz

What is the function of money that allows it to be used to buy goods and services without the complications of bartering?

• Medium of Exchange

• Unit of Account

• Store of Value

• Measure of Wealth

Which function of money is used to measure the value of goods and services?

• Medium of Exchange

• Unit of Account

• Store of Value

• Currency Standard

What function of money allows it to preserve or save purchasing power for future consumption?

• Medium of Exchange

• Unit of Account

• Store of Value

• Financial Instrument

What components make up M1 in the money supply?

• Cash, coins, checking deposits, traveler's checks

• Savings deposits, small time deposits, money market deposits

• Money market mutual funds, savings deposits, cash

• Checking deposits, small time deposits, money market mutual funds

What additional components are included in M2 that are not in M1?

• Cash and coins

• Traveler's checks and checking deposits

• Savings deposits, small time deposits, money market deposits, money market mutual funds

• Only cash and savings deposits

What do M1 and M2 together refer to in economics?

• Interest rates

• Money supply

• Inflation rate

• Exchange rate

Why is the supply of money considered constant in this context?

• Because it fluctuates with interest rates

• Because it is controlled by the government

• Because it has a vertical supply curve

• Because it changes with inflation

What components make up the Monetary Base?

• Currency in Circulation and Bank Reserves

• Currency in Circulation and Government Bonds

• Bank Reserves and Foreign Exchange

• Government Bonds and Foreign Exchange

What is included in M1 money supply?

• Coins, paper currency, and checkable deposits

• Near money accounts below $100,000

• Near money accounts above $100,000

• Certificates of deposits and mutual funds

Which money supply category has medium liquidity?

• M1

• M2

• M3

• None of the above