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MONEY

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  1. MONEY

  2. 3. Money with intrinsic value is called • a. local money • b. fiat money • c. legal money • d. bullion money • e. commodity money

  3. 4. The most liquid form of money is • a. certificates of deposits • b. checking accounts • c. savings accounts • d. time deposits • e. currency

  4. 8. The equation of exchange is • a. MQ = PV • b. MVP = Q • c. M = VPQ • d. MP = VQ • e. MV = PQ

  5. 1. Which of the following is an example of fiat money? • a. euros • b. gold • c. silver • d. salt • e. cigarettes

  6. 2. The breakdown of the American dollar into quarters, dimes, and pennies illustrates which characteristic of money? • a. scarcity • b. acceptability • c. durability • d. divisibility • e. portability

  7. 3. The ease with which an asset can be converted into the economy's medium of exchange is referred to as its • a. transferability • b. exchangeability • c. liquidity • d. acceptability • e. durability

  8. 6. Money used to buy a car serves as a(n) • a. unit of value • b. commodity • c. store of value • d. unit of account • e. medium of exchange

  9. 7. Money in the bank serves as a(n) • a. unit of account • b. medium of exchange • c. commodity • d. unit of value • e. store of value

  10. 8. A watermelon is valued at 2 dollars. This represents money's function as a(n) • a. commodity • b. unit of account • c. unit of value • d. medium of exchange • e. store of value

  11. 9. Money must be able to be used in multiple transactions without wearing out. This represents which characteristic of money? • a. acceptability • b. durability • c. scarcity • d. portability • e. divisibility

  12. 10. Money must be easy to transport. This represents which characteristic of money? • a. divisibility • b. acceptability • c. scarcity • d. durability • e. portability

  13. TRUE or FALSE • F • T • T • F • T • 11. The United States Dollar is an example of commodity money. • 12. Fiat money is created by government decree. • 13. Money replaced barter, which required a double coincidence of wants. • 14. United States Dollars are backed by gold. • 15. Interest is the cost of using money or credit.

  14. 4. The direct exchange of goods for other goods is known as • a. commerce • b. barter • c. finance • d. retail • e. wholesale

  15. 5. Money facilitates trade by removing the need for • a. voluntary exchange • b. a double coincidence of wants • c. property rights • d. supply and demand • e. markets

  16. 6. Barter is an example of a • a. store of value • b. means of exchange • c. unit of account • d. means of account • e. unit of value

  17. GDP

  18. 5. Which of the following is not counted in GDP? • a. the purchase of ten shares of Google stock • b. the government's purchase of aircraft carriers • c. the purchase of a haircut • d. the purchase of new fashionable running shoes • e. the construction of a manufacturing plant

  19. 11. Which category of GDP is the government's payment of a Social Security check counted in? • a. net exports • b. government expenditures • c. investment • d. The government's payment of a Social Security check is NOT counted in GDP. • e. consumption

  20. 6. Which of the following statements is NOT correct? • a. Dave's purchase of cocaine is not counted in GDP. • b. McDonalds’ purchase of hamburger buns is counted in consumption. • c. Sven the Swede's purchase of American made jeans is counted in net exports. • d. The Defense Department's purchase of a tank is counted in government purchases. • e. General Motors’ purchase of machinery is counted in investment.

  21. 9. Which category makes up the largest share of the United States’ GDP? • a. net exports • b. government purchases • c. investment • d. net imports • e. consumption

  22. 12. Which category of GDP is the purchase of a new home counted in? • a. net exports • b. government expenditures • c. investment • d. consumption • e. The purchase of a new home is NOT counted in GDP.

  23. 10. The factors of production flow from • a. firms to households via the product market • b. households to firms via the product market • c. households to firms via the government • d. households to firms via the factor market • e. firms to households via the factor market

  24. 11. Goods and services flow from • a. firms to households via the factor market • b. households to firms via the government • c. firms to households via the product market • d. households to firms via the factor market • e. households to firms via the product market

  25. 12. The money paid to firms via the product market is called • a. wages • b. profit • c. revenue • d. taxes • e. income

  26. 13. The money paid to households via the factor market is called • a. wages • b. profit • c. income • d. taxes • e. revenue

  27. 14. The money paid by households and firms to the government is called • a. profit • b. taxes • c. revenue • d. wages • e. income

  28. 15. Which of the following represents an injection into the circular flow model? • a. rent • b. imports • c. exports • d. savings • e. taxes

  29. LABOR

  30. 7. Structural unemployment is caused by • a. skills mismatch • b. undervalued currency • c. economic downturn • d. high inflation • e. time-lag between jobs

  31. 8. Frictional unemployment is caused by • a. skills mismatch • b. undervalued currency • c. high inflation • d. time-lag between jobs • e. economic downturn

  32. 9. Cyclical unemployment is caused by • a. time-lag between jobs • b. undervalued currency • c. economic downturn • d. high inflation • e. skills mismatch

  33. 11. Steve is laid off during a recession. Steve is • a. frictionally unemployed • b. structurally unemployed • c. seasonally unemployed • d. cyclically unemployed • e. technologically unemployed

  34. 3. Machines took Dan the factory worker's job. Dan is • a. seasonally unemployed • b. frictionally unemployed • c. structurally unemployed • d. technologically unemployed • e. cyclically unemployed

  35. 1. Steve recently quit his job as a bicycle repairman for greater monetary opportunities as a car salesman. Steve is • a. technologically unemployed • b. cyclically unemployed • c. seasonally unemployed • d. structurally unemployed • e. frictionally unemployed

  36. 2. Dave, a financial analyst, was laid off during an economic downturn. Dave is • a. seasonally unemployed • b. structurally unemployed • c. cyclically unemployed • d. frictionally unemployed • e. technologically unemployed

  37. 13. An abnormally high rate of which type of unemployment indicates a problem in the economy? • a. seasonal • b. cyclical • c. frictional • d. structural • e. technological

  38. 4. Jill’s snow cone parlor shuts down in December. Jill is • a. seasonally unemployed • b. structurally unemployed • c. cyclically unemployed • d. technologically unemployed • e. frictionally unemployed

  39. 5. Which of the following is not counted in the natural rate of unemployment and indicates a problem in the economy? • a. cyclical unemployment • b. technological unemployment • c. frictional unemployment • d. seasonal unemployment • e. structural unemployment

  40. 6. In the United States, the natural rate of unemployment is approximately • a. 2% • b. 15% • c. 0% • d. 10% • e. 5%

  41. 7. Which of the following groups is part of the labor force? • a. people in prison • b. people counted in the unemployment rate • c. people who are retired • d. people under sixteen • e. people in the army

  42. 16. Jim, discouraged by his inability to hold down a job, has given up looking for work. Jim is counted in the unemployment rate. • F

  43. 7. If the reserve ratio is 10%, a bank with deposits of $500 can loan out • a. $350 • b. $100 • c. $250 • d. $50 • e. $450

  44. 8. If the reserve ratio is 20%, the money multiplier is • a. 2 • b. 50 • c. 5 • d. 20 • e. 10

  45. 9. If the reserve ratio is 5%, how much money will be created in the economy by a deposit of $100? • a. $100 • b. $4000 • c. $2000 • d. $1000 • e. $500

  46. Monetary & Fiscal Policy

  47. 1. Modern fiscal policy results from the work of • a. Jean Baptiste Say • b. Arthur Laffer • c. Thomas Malthus • d. Arthur Okun • e. John Maynard Keynes

  48. 2. Which policy measure would a Keynesian economist support to combat recession? • a. deficit spending • b. balanced budget • c. decreasing wages • d. doing nothing • e. printing money

  49. 3. The goal of fiscal policy is to influence • a. aggregate demand • b. interest rates • c. the money supply • d. net exports • e. aggregate supply