Macro Chapter 10

Which of the following is NOT one of the three primary functions of money?

• Medium of exchange

• Store of value

• Unit of account

• Producer of goods

What is the most liquid form of money in the money supply?

• Savings accounts

• Currency and coins

• Money market funds

• Certificates of deposit

Which institution is primarily responsible for regulating the money supply in the United States?

• The World Bank

• The Federal Reserve System

• The Department of Treasury

• The International Monetary Fund

Which of the following best describes the "store of value" function of money?

• Money is used to compare prices

• Money can be saved for future use

• Money is used to buy goods

• Money is used to pay taxes

Which component is included in the M1 measure of the money supply?

• Savings deposits

• Currency in circulation

• Money market accounts

• Large time deposits

How does an increase in commercial bank lending affect the money supply?

• It decreases the money supply

• It increases the money supply

• It leaves the money supply unchanged

• It reduces the money multiplier

Which of the following is a responsibility of the Federal Reserve System?

• Setting tax rates

• Conducting monetary policy

• Regulating imports

• Managing the stock market

If the Federal Reserve wants to decrease the money supply, which action might it take?

• Lower the reserve requirement

• Raise the discount rate

• Buy government securities

• Lower interest rates

Why is control of the money supply important for an economy?

• It helps stabilize prices

• It increases government revenue

• It raises employment

• It boosts exports

Which of the following best explains the relationship between money supply and inflation in the long run?

• Increasing the money supply can lead to higher inflation

• Money supply and inflation are unrelated

• Decreasing the money supply increases inflation

• Increasing the money supply always lowers inflation