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1 | |
Money has 3 main functions, they are, _________, ____________ and _______________ |
|
| | A) | IOU, inflation hedge, store of value |
| | B) | medium of exchange, inflation hedge, store of value |
| | C) | medium of exchange, unit of account, IOU |
| | D) | medium of exchange, unit of account, store of value |
|
2 | |
The primary function of a bank is to |
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| | A) | control the money supply |
| | B) | provide notes and coins for trade |
| | C) | make a profit |
| | D) | provide a cheque clearing system |
|
3 | |
Banks create money by |
|
| | A) | printing it |
| | B) | issuing debit cards |
| | C) | accepting cheques |
| | D) | lending out part of their deposits |
|
4 | |
The money supply is ___________ |
|
| | A) | the Bank of England Issue Department |
| | B) | money + bank cards +credit cards |
| | C) | Cheques + money + bank cards + credit cards |
| | D) | Currency in circulation plus bank deposits |
|
5 | |
If banks and the private sector decide to hold less cash the money multiplier will be __________ |
|
| | A) | unchanged |
| | B) | larger |
| | C) | smaller |
| | D) | unstable |
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6 | |
Three variables affect the demand for money; they are ___________, ___________ and ____________ |
|
| | A) | bank opening hours, the proportion of weekly paid employees, interest rates |
| | B) | the price level, interest rates, real income |
| | C) | the time of year, bank opening hours, the price level |
| | D) | the proportion of weekly paid employees, the time of year, real income |
|
7 | |
If I keep some money available in case I see a bargain, this is an example of _____________ |
|
| | A) | asset demand for money |
| | B) | transactions demand for money |
| | C) | token demand for money |
| | D) | precautionary demand for money |
|
8 | |
When interest rates rise, other things being equal, we can expect the quantity of real money holdings to _____________ |
|
| | A) | fall |
| | B) | increase |
| | C) | not change |
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9 | |
When real income increases, other things equal, we can expect the demand for real money holdings to ______________ |
|
| | A) | fall |
| | B) | not change |
| | C) | increase |
|
10 | |
M4 is a _____________ measure of money and includes deposits at both _______ and ____________ |
|
| | A) | narrow, banks, building societies |
| | B) | wide, banks, insurance companies |
| | C) | narrow, banks, insurance companies |
| | D) | wide, banks, building societies |
|
11 | |
The size of the money multiplier is determined by the marginal propensity to consume |
|
| | A) | TRUE |
| | B) | FALSE |
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12 | |
An increase in the price level will likely increase the demand for nominal money |
|
| | A) | TRUE |
| | B) | FALSE |
2002 A McGraw-Hill Online Learning Centre