Question

1) Which of the following is not a form of commodity money?

a) cigarettes

b) All of these

c) checks

d) precious stones

2) Legal tender is

a) money that a government has required to be accepted in settlement of debts.

b) money that has a value other than as a currency.

c) money that must be backed by gold.

d) money that must be accepted as payment for goods and services.

3) Sarafina withdraws $450 from her saving account and places the money in her wallet. This transaction will

a) increase both M1 and M2.

b) not change M1 and decrease M2.

c) increase M1 and not change M2.

d) decrease both M1 and M2.

4) Demand deposits are included in

a) neither M1 nor M2.

b) M2.

c) M1.

d) both M1 and M2.

5) Currency is included in

a) both M1 and M2.

b) neither M1 nor M2.

c) M2 only.

d) M1 only.

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Answer #1

Ans1) c) checks

Ans2) a) money that a government has required to be accepted in settlement of debts.

Ans3) C) increase M1 and not change M2.

Ans4) a) both M1 and M2.

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