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Money, Banking, and Financial Markets Practice Test: The Basics of Money
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Money has four main functions: standard of deferred payment, store of value, medium of exchange, and unit of account.  Money can also be defined as an item or medium of exchange that symbolizes perceived value. People generally accept it for the payment of goods and services, as well as the repayment of loans.  There are many types of money, including: Fiat money: Notes and coins backed by a government Commodity money: A good that has an agreed value, such as cowrie shells, bars of salt, furs, feathers, and cattle Fiduciary money: Money that takes its value from a trust or promise of... Show more
Money, Banking, and Financial Markets Practice Test: The Basics of Money
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25 Questions

1. Since it does not have to be converted into anything else to make purchases, ________ is the most liquid asset.
2. During hyperinflations,
3. In explaining the evolution of money
4. A smart card is the equivalent of
5. If an individual moves money from a savings deposit account to a money market deposit account,
6. If an individual moves money from a small-denomination time deposit to a demand deposit account,
7. ________ is used to make purchases while ________ is the total collection of pieces of property that serve to store value.
8. If the price level doubles, the value of money
9. The evolution of the payments system from barter to precious metals, then to fiat money, then to checks can best be understood as a consequence of
10. If there are four goods in a barter economy, then one needs to know ________ prices in order to exchange one good for another.
11. Which of the following statements uses the economistsʹ definition of money?
12. To an economist, ________ is anything that is generally accepted in payment for goods and services or in the repayment of debt.
13. All but the most primitive societies use money as a medium of exchange, implying that
14. Compared to an economy that uses a medium of exchange, in a barter economy
15. When we say that money is a stock variable, we mean that
16. The decade during which the growth rates of monetary aggregates diverged the most is
17. The M1 measure of money includes
18. Dennis notices that jackets are on sale for $99. In this case money is functioning as a ________.
19. Recent financial innovation makes the Federal Reserveʹs job of conducting monetary policy
20. As a store of value, money
21. Money is a
22. Ranking assets from most liquid to least liquid, the correct order is
23. Which of the following is not included in the monetary aggregate M2?
24. If an individual moves money from a money market deposit account to currency,
25. Which of the following statements accurately describes the two measures of the money supply?

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