03 Jun Question (TCO 7) If you write a check on a bank to purchase a used Honda Civ
Question
(TCO 7) If you write a check on a bank to purchase a used Honda Civic, you are using money primarily as
a medium of exchange.
a store of value.
a unit of account.
an economic investment.
Question 2. Question :
(TCO 7) Currency held in the vault of First National Bank is
counted as part of M1.
counted as part of M2, but not M1.
only counted as part of M1 if it was deposited into a checking account.
not counted as part of the money supply.
Instructor Explanation: Chapter 31
Points Received: 1 of 1
Comments:
Question 3. Question :
(TCO 7) Answer the question on the basis of the following list of assets:
1. Large-denominated ($100,000 and more) time deposits
2. Noncheckable savings deposits
3. Currency (coins and paper money) in circulation
4. Small-denominated (less than $100,000) time deposits
5. Stock certificates
6. Checkable deposits
7. Money market deposit accounts
8. Money market mutual fund balances held by individuals
9. Money market mutual fund balances held by businesses
10. Currency held in bank vaults
Refer to the above list. The M1 definition of money comprises item(s)
6 only.
3, 4, and 6.
3 and 6.
3, 6, and 10.
Question 4. Question :
(TCO 7) Assume the Standard Internet Company negotiates a loan for $5,000 from the Metro National Bank and receives a checkable deposit for that amount in exchange for its promissory note (IOU). As a result of this transaction
the supply of money is increased by $5,000.
the supply of money declines by the amount of the loan.
a claim has been “demonetized.”
the Metro Bank acquires reserves from other banks.
Question 5. Question :
(TCO 7) A bank temporarily short of required reserves may be able to remedy this situation by
borrowing funds in the federal funds market.
granting new loans.
shifting some of its vault cash to its reserve account at the Federal Reserve.
buying bonds from the public.
Question 6. Question :
(TCO 7) Money is destroyed when
loans are made.
checks written on one bank are deposited in another bank.
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