Podcast
Questions and Answers
Which function of money encourages specialization in the production of goods and services?
Which function of money encourages specialization in the production of goods and services?
- Store of value
- Unit of account
- Medium of exchange (correct)
- Standard of deferred payment
According to the liquidity premium theory, what is the key assumption about bonds of different maturities?
According to the liquidity premium theory, what is the key assumption about bonds of different maturities?
- They are perfect substitutes (correct)
- They offer the same returns
- They have different risk levels
- They have the same liquidity
Which monetary asset is likely to be the least liquid?
Which monetary asset is likely to be the least liquid?
- Money market account balance
- Physical cash
- Savings account balance
- Funds held as certificate of deposits (correct)
Which of the following is NOT a financial intermediary?
Which of the following is NOT a financial intermediary?
What determines the amount of dividends paid to stock owners?
What determines the amount of dividends paid to stock owners?
Study Notes
Functions of Money
- The medium of exchange function of money encourages specialization in the production of goods and services.
Liquidity Premium Theory
- The key assumption of the liquidity premium theory is that bonds of different maturities have different yields due to differences in liquidity.
Monetary Assets
- Currency is likely to be the least liquid monetary asset.
Financial Intermediaries
- The following are financial intermediaries: banks, thrifts, life insurance companies, pension funds, and mutual funds.
Dividend Payments
- The amount of dividends paid to stock owners is determined by the board of directors of a corporation.
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Description
Test your knowledge of the financial system and money functions with this quiz. Explore the link to study for your final exam and enhance your understanding of money transfer, financial securities, and the role of money in encouraging specialization in production.
