Question

1. Fiat money

Select one:

a. can be exchanged for gold and silver.

b. is found in gold certificates .

c. is not acceptable in the U.S.

d. is accepted on faith.

2. Core inflation excludes price changes in food and energy because these price chang-es

Select one:

a. may not be related to a trend in the economy's overall price level.

b. may be related to trend factors in the economy's overall price level.

c. are not volatile.

d. show a constant inflation rate.

3. Which of the following is seen as a benefit to society in moving away from using checks to electronic banking?

Select one:

a. processing checks is a capital-intensive process

b. electronic banking is a labor-intensive process

c. processing checks is less costly than electronic banking

d. electronic banking is a more efficient process than check clearing

4. What agency processes most of the electronic payments?

Select one:

a. the Treasury

b. the Congress

c. the FDIC

d. the Fed

5. Disinflation

Select one:

a. is the same thing as deflation.

b. is a slowdown in the rate of inflation.

c. is a persistent decline in the level of prices.

d. is usually considered a bad thing.

6. To combat unemployment the government should use fiscal and monetary policies to

Select one:

a. run a deficit and increase the money supply.

b. run a deficit and decrease the money supply.

c. run a surplus and increase the money supply.

d. run a surplus and decrease the money supply.

7. Government demand-management policies that are used to try to increase the equi-librium level of output in the economy are known as

Select one:

a. expansionary policies.

b. fiscal dividends.

c. output policies.

d. laissez-faire policies.

8. Although prices in the United States and France may be stable, changes in the ex-change rate between dollars and euros can make the actual cost of trade more expensive for one or the other.

Select one:

a. true

b. false

Answer 1

1. D. Is accepted on faith

Fiat money has no intrinsic value but is established by money by government regulation. People use it because of their faith in the government rules.

2. A. May not be related to a trend in the economy's overall price level.

Core inflation excludes food and energy prices, because they are so volatile and do not often always reflect the trend in underlying inflation.

3. D. Electronic banking is a more efficient process than check clearing.

4. D. The Fed

The Federal Reserve plays a key role in processing small-value electronic credit or debit transfers, such as direct deposits of payroll or recurring bill payments.

5. B. Is a slowdown in the rate of inflation.

6. B. Run a deifict and decrease the money supply.

To combat unenemployment government needs to adopt expansionary fiscal policy but contractionary monetary policy so that inflation is not increased.

7. A. Expansionary policies.

8. A. True