1. Which of these are a role for money?
(a) double coincidence of wants
(b) law of demand
(c) barter
(d) portable
2. Money is stable when
(a) it is widely accepted for payment.
(b) it can be divided into smaller units, like change.
(c) it is portable,
(d) its purchasing power does not vary over time,
3. The U.S. dollar is an example of
(a) inconvertible fiat money
(b) the gold standard
(c) barter exchange
(d) commodity money
4. Which of these is NOT a function of banks:
(a) they help to facilitate trade by providing alternative methods of payment
(b) safe places for people to store their wealth
(c) they bring together savers and borrowers.
(d) they are responsible for the conduct of monetary policy
5. Supply side economics
(a) espouses that tax cuts will increase aggregate demand and stimulate economic growth
(b) espouses that tax cuts will increase aggregate supply and stimulate economic growth
(c) is generally accepted by mainstream economists
(d) has proven to be effective in stimulating the U.S. economy
6. Which of the following is NOT true of inflation
(a) it describes an increase in the over-all level of prices of goods and services
(b) it describes both increases in prices and decreases in prices
(c) it is commonly measured by the CPI - the Consumer Price Index
(d) it is affected by the growth of the money supply
7. The CPI measures
(a) measures the prices of all goods purchased by individuals and non-profit institutions
(b) the average cost of goods and services purchased by individuals and firms
(c) the average cost of the goods and services purchased by consumers
(d) the average price of food and fuel, the most volatilely-priced purchased goods
8. Which of the following describes a monetary policy?
(a) federal open market operation
(b) increase in tax rates
(c) government issuance of U.S. securities
(d) infrastructure spending
9. Which of these are causes of the Great Recession?
(a) weak banking regulation combined with rampant financial innovation
(b) federal government tax cuts
(c) large federal deficit
(d) excessive banking regulation combined with rampant banking innovations
10. Which of the following describes an expansionary monetary policy? (Please select all correct answers)
(a) A decrease in the reserve ratio
(b) FOMC directive to purchase securities
(c) FOMC directive to sell securities
(d) Increase in the overnight federal funds rate