Chapter 18 Self-test questions

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'Fiat' money is:

Paper money backed by gold correct incorrect

Money based on some valuable commodity correct incorrect

Money that derives its legitimacy from the law and hence is widely accepted for payments of goods and services correct incorrect

Money used to pay Italian car workers in Turin correct incorrect

Money invented by Latin monks correct incorrect

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If the public's desired cash ratio is 20 per cent and the banks' desired reserve ratio is 10 per cent, what is the size of the money multiplier?

10 correct incorrect

5 correct incorrect

2 correct incorrect

4 correct incorrect

6 correct incorrect

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If the public's desired cash ratio is 10 per cent and the banks' desired reserve ratio is 10 per cent, what is the size of the money multiplier?

10 correct incorrect

5 correct incorrect

2.5 correct incorrect

4 correct incorrect

5.5 correct incorrect

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The major functions of money include the following except _______

Unit of account correct incorrect

Medium of exchange correct incorrect

Store of value correct incorrect

Expression of national sovereignty correct incorrect

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Money, as a medium of exchange, eliminates the problem of _____

poverty correct incorrect

double coincidence of wants correct incorrect

Barter trade correct incorrect

None of the above correct incorrect

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Gold and silver had several advantages over other commodities that were used as money. One of such advantages was due to _____

abundance correct incorrect

their scarcity correct incorrect

Beautiful colours correct incorrect

Volatility in their prices correct incorrect

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Seigniorage refers to ______

A special form of tax for shipping firms correct incorrect

Revenue that the central bank generates with its ability to create money correct incorrect

Spanish form of barter trade correct incorrect

None of the above correct incorrect

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High powered money ________

Is money spent by the rich and powerful correct incorrect

Is also known as the monetary base correct incorrect

Is money with very large values correct incorrect

Money that can buy lots of things correct incorrect

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When a bank anticipates a cash drain and increases deposits, it results in _________.

Financial crisis correct incorrect

collapse correct incorrect

Excess reserves correct incorrect

None of the above correct incorrect

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Total amount of money in the economy is _______

deposits correct incorrect

currency correct incorrect

Money supply correct incorrect

Money aggregation correct incorrect