Question

A. When a country imposes capital controls, it is controlling the

amount of money flowing in or out of the country.

amount of reserves that banks must hold.

portion of bank deposits that must be held at its central bank.

portion of bank deposits that must be used for loans to the government.

B. If M1 is $1,200 billion, currency held outside banks is $400 billion, and traveler's checks is $10 billion, then small-denomination time deposits equal

$790 billion.

$390 billion.

$800 billion.

$1,190 billion.

There is not information to answer the question.

C.

Which of the following statements is false?

Currency is money, but money is more than just currency.

M1 is a component of M2.

Retail money market mutual funds are part of M2, but institutional money market mutual funds are not.

Credit cards are money since they are widely accepted for purposes of exchange.

Money reduces the transaction costs of making exchanges.

D. The risk of specializing (in the production of one good or service) is

lower in a barter economy than in a money economy.

lower in a money economy than in a barter economy.

the same in both a money and barter economy.

greater the less likely you and the person you want to trade with have a double coincidence of wants.

b and d

Answer 1

A) the amount of money flowing in or out of the country

Capital controls are imposed when the nation wants to control the inflow and outflow of money.

B) there is not information to answer the question.

C) credit cards are money since they are widely accepted for purpose of exchange

Credit cards are not money because they do not satisfy other functions of money. It is a mode of payment and is not money