SOLVED

21) Which of the following is NOT a form of commodity money? A) checks B) cigarettes C) precious stones D) all of the above 22) Legal tender is A) money that must be backed by gold. B) money that cannot be counterfeited. C) money that has a value other than as a currency. D) money that a government has required to be accepted in settlement of debts. 23) To ensure that ________ will be accepted, the U.S. government implicitly promises the public that it will not print money so fast that it loses its value. A) paper money B) commodity money C) barter cash D) exchange rates 24) When the value of money falls as a result of a rapid increase in its supply, ________ occurs. A) currency debasement B) deflation C) negative exchange D) all of the above 25) In the country of Kaboom, the government doubled the money supply overnight. As a result of this action, the price of a gallon of milk increased from 3 Kaboomian dollars to 200 Kaboomian dollars. This is an example of A) deflation. B) a change in the legal tender. C) a change from commodity money to fiat money. D) currency debasement. 26) M1 A) is the sum of currency plus travelers checks. B) is the narrowest definition of the money supply. C) includes small time deposits. D) includes credit cards. 27) M1 is a A) stock variable. B) flow variable. C) near money. D) commodity money. 28) Checking account balances are included in A) M1 only. B) M2 only. C) both M1 and M2. D) neither M1 nor M2. 29) Which of the following is included in M1, but not included in M2? A) currency held outside banks B) travelers checks C) demand deposits D) none of the above 30) Serena transfers $8,000 from her checking account to her savings account. This transaction will A) not change M1 and decrease M2. B) decrease M1 and not change M2. C) increase both M1 and M2. D) decrease both M1 and M2.