Question

1.)

Gold, silver, and furs, when used as money, are referred to as

	fiat money
	precious money
	paper currency
	commodity money
	exchange money

2.)

The money supply is considered to be M1. M1 consists of what?

	currency + checking account balances + saving account balances
	currency + checking account balances + travelers' checks
	currency + checking account balances + credit cards
	currency + credit cards + certificates of deposit
	currency only

3.)

The main purpose of financial intermediaries is that

	the process of finding loans is complicated
	firms are usually unwilling to part with extra revenue so financial intermediaries take these revenues from firms
	they are examples of banks
	we could not function in society without them
	they serve as brokers between borrowers and lenders

4.)

Reserves are defined as

	the total cash in bank vaults
	money deposited in Federal Reserve accounts
	the sum of vault cash and deposits at Federal Reserve banks
	the total amount of money a bank must hold
	ten percent of checking deposits liabilities

Answer 1

1) Gold, silver, and furs are called commodity money. This is because the metals in themselves carry value. Fiat money is something made from a material that in itself lacks value but is still considered a valid unit of exchange. Rest of the options do not refer to names of money.

2) M1 refers to the money supply comprising of the following: physical currency and coin, demand deposits, travelers' checks, other checkable deposits, and negotiable order of withdrawal (NOW) accounts. M1 is the most liquid money type.

so the answer is currency + checking account balances + travelers' checks

3) Financial intermediaries ease the communication between the lenders and the borrowers. So option e)   
they serve as brokers between borrowers and lenders is the most relevant option. Lenders have extra assets or money which they can give to a financial intermediary like a bank in return of an interest rate and then these intermediaries can lend it to the needy lenders and charge them interest rate, usually higher than given to lenders.

4) Bank reserves are the minimum cash value that a bank must keep on hand in order to meet central bank requirements. Thus option d) the total amount of money a bank must hold is the correct answer.