Money chap 7 & 8

When money held as an asset, it functions as a

• standard of deferred payment

• medium of exchange

• measure of value

• store of value

The use of dollar bill to buy a burger represents the function of money as ............

• a store of value

• a unit of account

• a medium of exchange

• all of the above

one of the reasons for people to hold money is to pay for unexpected accidents and other emergency expenses. This motive of holding money is called ...................

• transaction motive

• emergency motive

• precautionary motive

• speculative motive

Money use for transaction is known as

• quasi money

• broad money

• M1

• M2

The central bank should implement contractionary monetary policy to reduce inflation by

• increasing the discount rate

• decreasing the discount rate

• decreasing the required reserve ratio

• buying government securities in open market

Acting to establish an effective monetary policy and acting as a banker to the commercial banks are two basic functions of ....................

• commercial banks

• central banks

• clearing houses

• merchant banks

the goal of expansionary monetary policy is

• to have an equal distribution of income

• to decrease interest rates

• to decrease price levels

• to increase the level of aggregate output

Which of the following can be considered as the component of near money?

• Coins and notes

• current account deposits with commercial banks

• Negotiable certificate of deposits in other financial institution

• all of the above

According to Keynesian theory, a contraction in money supply tends to .......... interest rates and ............ investment, aggregate demand, price real GDP and employment

• decrease; decrease

• decrease; increase

• increase; decrease

• increase; increase

The information below shows the balance sheet of Bank Summer. How much the reserve ratio of the bank

Asset : Reserve USD1000, Loans USD9000

Liability USD 10,000

• 5%

• 10%

• 20%

• 40%