12. Which of the following is not included in M1? a. Currency b. Demand deposits c. Savings deposits d. Traveler's checks 13. Rashad and Brianna decide to go on a vacation, As a result, they withdraw $5,000 from their savings account to purchase $5,000 worth of traveler's checks. As a result of these changes, a. MI increases by $5,000 and M2 decreases by $5,000. b. MI increases by $5,000 and M2 stays the same. c. MI and M2 stay the same. d. MI decreases by $5,000 and M2 increases by $5,000. 14. When the Fed decreases the discount rate, banks will a. borrow more from the Fed and lend more to the public. The money supply increases. b. borrow more from the Fed and lend less to the public. The money supply decreases. c. borrow less from the Fed and lend more to the public, The money supply increases. d. borrow less from the Fed and lend less to the public. The money supply decreases. 15. The price index was 105 in Year 1 and 111 in Year 2. What was the inflation rate? a. 5.7 percent b. 0.057 percent c. -5.7 percent d. 105.7 percent 16. The producer price index measures the cost of a basket of goods and services a. typically produced in the economy. b. produced for a typical consumer. c. sold by producers. d. bought by firms. 17. In a closed economy, what does the difference between the tax revenue and government purchases, (T-G), represen a. National saving b. Investment c. Private saving d. Public saving 18. You pay for ham and cheese from the deli with currency. Which function of money does this best illustrate? a. Medium of exchange b. Unit of account c. Store of value d. Liquidity
12. Which of the following is not included in M1? a. Currency b. Demand deposits c. Savings deposits d. Traveler's checks 13. Rashad and Brianna decide to go on a vacation, As a result, they withdraw $5,000 from their savings account to purchase $5,000 worth of traveler's checks. As a result of these changes, a. MI increases by $5,000 and M2 decreases by $5,000. b. MI increases by $5,000 and M2 stays the same. c. MI and M2 stay the same. d. MI decreases by $5,000 and M2 increases by $5,000. 14. When the Fed decreases the discount rate, banks will a. borrow more from the Fed and lend more to the public. The money supply increases. b. borrow more from the Fed and lend less to the public. The money supply decreases. c. borrow less from the Fed and lend more to the public, The money supply increases. d. borrow less from the Fed and lend less to the public. The money supply decreases. 15. The price index was 105 in Year 1 and 111 in Year 2. What was the inflation rate? a. 5.7 percent b. 0.057 percent c. -5.7 percent d. 105.7 percent 16. The producer price index measures the cost of a basket of goods and services a. typically produced in the economy. b. produced for a typical consumer. c. sold by producers. d. bought by firms. 17. In a closed economy, what does the difference between the tax revenue and government purchases, (T-G), represen a. National saving b. Investment c. Private saving d. Public saving 18. You pay for ham and cheese from the deli with currency. Which function of money does this best illustrate? a. Medium of exchange b. Unit of account c. Store of value d. Liquidity
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:12. Which of the following is not included in M1?
a. Currency
b. Demand deposits
c. Savings deposits
d. Traveler's checks
13. Rashad and Brianna decide to go on a vacation, As a result, they withdraw $5,000 from their savings account to
purchase $5,000 worth of traveler's checks. As a result of these changes,
a. MI increases by $5,000 and M2 decreases by $5,000.
b. MI increases by $5,000 and M2 stays the same.
c. MI and M2 stay the same.
d. M1 decreases by $5,000 and M2 increases by $5,000.
14. When the Fed decreases the discount rate, banks will
a. borrow more from the Fed and lend more to the public. The money supply increases.
b. borrow more from the Fed and lend less to the public. The money supply decreases.
c. borrow less from the Fed and lend more to the public. The money supply increases.
d. borrow less from the Fed and lend less to the public. The money supply decreases.
15. The price index was 105 in Year 1 and 111 in Year 2. What was the inflation rate?
a. 5.7 percent
b. 0.057 percent
c. -5.7 percent
d. 105.7 percent
16. The producer price index measures the cost of a basket of goods and services
a. typically produced in the economy.
b. produced for a typical consumer.
c. sold by producers.
d. bought by firms.
17. In a closed economy, what does the difference between the tax revenue and government purchases, (T– G), represent?
a. National saving
b. Investment
c. Private saving
d. Public saving
18. You pay for ham and cheese from the deli with currency. Which function of money does this best illustrate?
a. Medium of exchange
b. Unit of account
c. Store of value
d. Liquidity
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