ECO 4223 Exam 1: Questions & Answers (100%
Accurate) Money is defined as a _______ Correct Ans - Commonly accepted medium of exchange An item serves as a _______ when prices are quoted or recorded in terms of the item. Correct Ans - Unit of account ________ money is an asset for its holder and a liability of, or financial claim against, its issuer. Correct Ans - Inside A(n) _______ (or, base money) is a money that is used for final settlement. It is not a claim to some other asset. Correct Ans - Outside money A(n) ______ money is a good that is used as money. It has both monetary and non-monetary uses. Historical examples include gold, silver, and salt.Correct Ans - Commodity A(n) ______ money is an item that has no use apart from from serving as a commonly accepted medium of exchange. Modern examples include the dollar, euro, and renminbi. Correct Ans - Fiat When a government confers ________, courts are required to recognize the item as satisfactory payment of any monetary debt, and might settle disputes by requiring payment in the item. A _______, in contrast requires the item be accepted in spot market transaction. Correct Ans - Legal tender status; forced money law When a government ________, it commits to accepting taxes and making purchases with it. Correct Ans - Makes a money publicly receivable
One problem with the state theory of money is that: Correct Ans - It
requires accepting that someone recognized the potential of money before money had ever existed.In a simple barter economy, each trader faces the problem of finding a trading partner with preferences and endowments reciprocal to his own. This has 1 / 2
come to be known as the problem of finding a mutual: Correct Ans -
Coincidence of wants Carl Menger's ________ theory of money describes a situation where money emerges out of barter transactions. The outcome in his theory- a commonly accepted medium of exchange- is a product of human action, but not of human design. Correct Ans - Spontaneous order The _______ -or, price of money-is the amount of goods or services one must hand over to acquire one unit of money. Correct Ans - Purchasing power of money The purchasing power of money is equal to 1 _______ the price level.Correct Ans - Divided by Which of the following price indices tracks the largest basket of goods and services? Correct Ans - Consumer Price Index The Consumer Price Index puts ______ weight on health insurance expenditures than the Personal Consumption Expenditures Price Index because the CPI is designed to reflect ________. Correct Ans - More; all prices faced by consumers Use the data in Table 1 to calculate the simple inflation rate from 1972 to 1973, expressed as a percent rounded to one decimal place.Table 1,. Personal Consumption Expenditures Price Index (PCEPI), 1970 -
- Correct Ans - 5.8
- / 2
Use the data in Table 1 to express the continuously compounding annual rate of inflation from 1972 to 1975.Table 1. Personal Consumption Expenditures Price Index (PCEPI), 1970-1975.Correct Ans - [In(28.5)-In(22.5)]/3 Use the data in Table 2 to express to continuously compounding annual rate of inflation from January 1970 to April 1970.Table 2. Personal Consumption Expenditures Price Index (PCEPI), January 1970- June 1970. Correct Ans - [In(20.7)-In(20.5)]/3