Podcast
Questions and Answers
What is M1 composed of?
What is M1 composed of?
- Money market mutual funds and CDs
- Currency and small denomination time deposits
- Retail money market funds and credit cards
- Currency and checkable deposits (correct)
Why are credit card purchases not included in the money supply?
Why are credit card purchases not included in the money supply?
- Because they are not a store of value
- Because they are a type of loan
- Because they are not a medium of exchange
- Because they involve borrowed funds (correct)
What is the role of banks in the macroeconomy?
What is the role of banks in the macroeconomy?
- To provide a way for savers to supply their funds to borrowers
- To make a profit without taking risks
- To create a loanable funds market
- To serve as financial intermediaries and create the supply of money (correct)
What is the difference between assets and reserves on a bank's balance sheet?
What is the difference between assets and reserves on a bank's balance sheet?
How can banks be profitable?
How can banks be profitable?
What do banks do with the deposits they receive?
What do banks do with the deposits they receive?
What is the function of money that enables people to compare the prices of different goods and services?
What is the function of money that enables people to compare the prices of different goods and services?
What type of money has no inherent value except as a medium of exchange?
What type of money has no inherent value except as a medium of exchange?
What is the term for the trade of a good or service in the absence of a commonly accepted medium of exchange?
What is the term for the trade of a good or service in the absence of a commonly accepted medium of exchange?
What is the term for a situation in which each party in an exchange transaction happens to have what the other party desires?
What is the term for a situation in which each party in an exchange transaction happens to have what the other party desires?
What type of money involves the use of an actual good for money, and the good itself has value apart from its function as money?
What type of money involves the use of an actual good for money, and the good itself has value apart from its function as money?
What does the Federal Reserve closely monitor to measure the quantity of money in the economy?
What does the Federal Reserve closely monitor to measure the quantity of money in the economy?
