ECON 1BB3 Final: Chapter 10

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8 Mar 2017

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ECON 1BB3 Full Course Notes

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Chapter 10: money in long run: the monetary system review. Barter- the exchange rate of one good for another. In a barter based economy trade requires the double coincidence of wants. Money prevents the need for this unlikely circumstance. Money: a set of assets in an economy that people regularly use to buy goods and services from other people. Money has 3 functions: it is a medium of exchange, a unit of account, a store of wealth. *these 3 functions distinguish money from other assets such as stocks, bonds, real estate, art, etc. Medium of exchange: an item that buyers give to sellers when they want to purchase goods or services. Unit of account: the yardstick people use to post prices and record debts. Store of value: an item that people can use to transfer purchasing power from the present to the future.

Related Questions

How many ratios of exchange would an individual have to cope with in a barter economy with 276 different items available for exchange?
How many absolute prices would there be if one of the items available for exchange were used as a generally acceptable medium of exchange?
Explain how the use of money as a unit of account can help reduce transaction costs in this economy.

1. To say money is socially defined means that:

A) the money supply includes all public and private securities purchased by society.

B) whatever performs the functions of money extremely well is considered to be money.

C) society, acting through Congress, specifies what shall be included in the money supply.

D) money has been defined in a Constitutional amendment.

2. Money functions as:

A) a medium of exchange.

B) a store of value.

C) a unit of account.

D) all of these.

3. If you are estimating your total expenses for school next semester, you are using money primarily as:

A) a store of value.

B) an economic investment.

C) a unit of account.

D) a medium of exchange.

4. If you place a part of your summer earnings in a savings account, you are using money primarily as a:

A) medium of exchange.

B) store of value.

C) standard of value.

D) unit of account.

5. If you write a check on a bank to purchase a used Honda Civic, you are using money primarily as:

A) a store of value.

B) a medium of exchange.

C) a unit of account.

D) an economic investment.

6. A $70 price tag on a sweater in a department store window is an example of money functioning as a:

A) standard of deferred payments.

B) medium of exchange.

C) unit of account.

D) store of value.

7. Stock market price quotations best exemplify money serving as a:

A) index of satisfaction.

B) store of value.

C) medium of exchange.

D) unit of account.

8. Purchasing common stock by writing a check best exemplifies money serving as a:

A) medium of exchange.

B) unit of account.

C) index of satisfaction.

D) store of value.

crimsonalligator541

1.During a recession, if a government uses an expansionary fiscal policy to increase GDP, the:

		the aggregate supply curve will shift to the right.
		the aggregate supply curve will shift to the left.
		the aggregate demand curve will shift to the left.
		the aggregate demand curve will shift to the right.

2. ____________ is a completely inadequate mechanism ____________________ in a modern advanced economy.

		Currency; for providing a medium of exchange
		Money; for providing a store of value
		Barter; for trying to coordinate trades
		Money; to use as a unit of account

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ECON 1BB3 Final: Chapter 10

ECON 1BB3 Full Course Notes

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