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    @ASSIGNMENT 11-Money

    Uploaded by

    Abhishek Mishra
    The document contains a worksheet with questions about money and monetary policy. It includes multiple choice, fill in the blank, true/false, short answer, and identification questions. It tests understanding of concepts like the functions of money, required reserve ratios, definitions of inflation and deflation, and components of the money supply measures M1 and M2.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd

    @ASSIGNMENT 11-Money

    Uploaded by

    Abhishek Mishra
    21 views2 pages
    The document contains a worksheet with questions about money and monetary policy. It includes multiple choice, fill in the blank, true/false, short answer, and identification questions. It tests understanding of concepts like the functions of money, required reserve ratios, definitions of inflation and deflation, and components of the money supply measures M1 and M2.

    Original Description:

    Macroeconomics practice assignment

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    The document contains a worksheet with questions about money and monetary policy. It includes multiple choice, fill in the blank, true/false, short answer, and identification questions. It tests understanding of concepts like the functions of money, required reserve ratios, definitions of inflation and deflation, and components of the money supply measures M1 and M2.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    21 views2 pages

    @ASSIGNMENT 11-Money

    Uploaded by

    Abhishek Mishra
    The document contains a worksheet with questions about money and monetary policy. It includes multiple choice, fill in the blank, true/false, short answer, and identification questions. It tests understanding of concepts like the functions of money, required reserve ratios, definitions of inflation and deflation, and components of the money supply measures M1 and M2.

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    © All Rights Reserved
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    You are on page 1of 2

    Name ____________

    WORKSHEET-Money
    Multiple Choice Questions:

    1. Which of the following is NOT a function of money?

    (a) It facilitates the barter system.


    (b) It serves as a store of wealth.
    (c) It serves as a unit of value.
    (d) It serves as a medium of exchange.

    2. The Required Reserve Ratio (RR) is a percentage set by the Federal Reserve System that requires
    banks to:

    (a) Lend the RR percent of the bank’s customer Demand Deposits (DD) to the public.
    (b) Hold the RR percent of the bank’s customer DD in the form of cash in their vault or in accounts at the
    Federal Reserve.
    (c) Pay RR percent of the bank’s customer DD to the Federal Reserve as an annual membership fee.
    (d) Hold the RRR percent of the bank’s customer DD in the forms of cash in their vault.

    Fill in the blanks:

    1. the fact that money can be immediately used in exchange, whereas valuable jewelry cannot,
    illustrates the fact that money is very ______

    2. the measures of the money supply that includes currency in circulation, traveler's checks, and
    checking accounts is called _____

    3. when the aggregate price level falls economists uses the term _____ to describe the situation.

    4. when something contains intrinsic value and also serves as a medium exchange it is known as ___

    5. __________ definition of the money supply is broad enough to include savings deposits as well as
    checkable deposits and currency

    6. a medium of exchange that is valuable because a government says that it has value known as _____

    7. the portion of bank reserves that a bank must keep on reserve are known as _____

    True and False:

    1. when a government finances its expenditures by printing money rather than collecting taxes, this can
    lead to "too much money chasing too few goods" and hyperinflation

    2. coins and paper money have in some periods been commodity money and in other periods of fiat
    money

    3. nelson takes a $100 bill he had in his wallet and deposits it into his checking account. Thus, M1
    increases by $100
    Short Answer:

    1. what are the two types of money?

    2. what are commercial banks?

    3. what are investments banks?

    Identify:

    M1/ M2/ Niether


    1. $100 in her wallet
    2. $800 in her checking account
    3. $1,000 in her savings accounts
    4. A $20 traveler's check from her last business
    trip to china
    5. A $300 outstanding credit card bill
    6. $3,000 in a small certificate of deposit
    7. A car worth $5,000
    8. A house, worth $200,000

    Problems:

    1. Suppose the country of Econometallica has the following monetary asset information as of April 2004:

    Cash in hands of the public = $300b (where ‘b’ represents billion)

    Demand Deposits (DD) = $400b

    Other Checkable Deposits = $150b

    Traveler’s checks = $50b

    Savings Type accounts = $2000b

    Money Market Mutual Funds (MMMF) = $1000b

    Small Time Deposits = $500b

    Large Time Deposits = $450b

    (a) Calculate M1 for Econometallica.

    (b) Calculate M2 for Econometallica.

    (c) Using the definition of the money supply, what is the money supply for Econometallica?

    (d) Which item is not included in the calculations of M1 and M2?

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