Question

In: Economics

Please answer all questions, thanks 1. Money is defined by economists as: A. All stores of...

Please answer all questions, thanks

1. Money is defined by economists as:

A.

All stores of value.

B.

Any liquid asset.

C.

Legal tender.

D.

Anything that performs the functions of money.

E.

Currency and coin.

2. The primary form of money in the modern world is:

A.

Household and business liabilities.

B.

The debt issued by the Federal government.

C.

Coins.

D.

The deposit liabilities of banks.

E.

Paper currency.

3. Commodity money is:

A.

A money that never changes its value.

B.

A money that is durable.

C.

A money that has a dual value as both money and commodity.

D.

A money that is valuable relative to its bulk.

E.

A money that serves as a store of value

4. M2 consists of:

A.

The currency held by banks plus all checkable bank deposits.

B.

The currency held by the nonbank public plus checkable bank deposits.

C.

The currency held by the nonbank public plus checkable bank deposits and all liquid savings deposits.

D.

The currency held by banks.

E. The currency held by the nonbank public plus all liquid assets.

Solutions

Expert Solution


Question 1

Money serves following functions -

1. It acts as medium of exchange.

2. It acts as unit of account.

3. It acts as store of value.

4. It acts as instrument of deferred payment.

So, anything that fulfills all these functions of money is regarded as money by economists.

Hence, the correct answer is the option (D).

Question 2

In modern world, each nation issues its own currency to be used as money.

Currencies around the world are issued in form of paper.

So,

The primary form of money in the modern world is paper currency.

Hence, the correct answer is the option (E).

Question 3

Commodity money refers to the money that is in the form of a commodity such as gold or silver and tends to fulfill the functions of money.

Hence, the correct answer is the option (C).

Question 4

M2 is a measure of money supply.

M2 consists of currency held by public, checkable deposits with banking system, and savings deposits with the banking system.

Hence, the correct answer is the option (C).


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