Econ Chapter 10 Sample Questions

Brad details cars and Angelina babysits. Angelina agrees to babysit for Brad's kids if he details her minivan. This is an example of

Barter

Which of the following factors causes the barter system to be inefficient?

It requires a double coincidence of wants

The development of money as a medium of exchange has facilitated the expansion of trade because

money eliminates the "double coincidence of wants" problem.

When you pay $8 for salad you ordered for lunch, you are using money as a(n)

Medium of exchange

Veronica received a federal income tax refund of $600 in May 2016. Veronica put this money in a saving account so that she could spend it when she went on vacation in July 2016. This is an example of money serving as a(n)

Store of value

S withdraws $450 from her saving account and places the money in her wallet. This transaction will

increase M1 and not change M2

Which of the following would not be included in M2?

Treasury Bonds

Among the members of the Federal Open Market Committee

are the seven members of the Board of Governors of the Fed

As the interest rate rises, people hold ________ money in non-interest-bearing checking accounts instead of savings accounts because the opportunity cost of holding money has ________

less; risen

The price of bonds and the interest rate are

negatively related

Which of the following instruments is not used by the Federal Reserve to change the money supply?

The federal tax code

An open-market purchase of securities by the Fed results in ________ in reserves and ________in the supply of money.

an increase; an increase

Assume there is no leakage from the banking system and that all commercial banks are loaned up. The required reserve ratio is 10%. If the Fed buys $10 million worth of government securities from the public, the change in the money supply will be

$100 million