Ch27 Money and Banking

*Ch27 Money and Banking*

*Multiple Choice Questions*

*1.* In macroeconomics, ___________________________ describes a situation in which two people each want to exchange some good or service that the other can provide.

A. a medium of exchange
B. a double coincidence of wants
C. interrelated banking
D. the usefulness of money

Answer: B Reference:

Explanation:

Type: Multiple Choice

*2.* Which of the following is omitted in a barter transaction?

A. trade
B. medium of exchange
C. store of value
D. money

Answer: D Reference:

Explanation:

Type: Multiple Choice

*3.* If Bill performs plumbing upgrades for Alice in exchange for her incorporating his business, then their _________________________ will be satisfied.

A. balance of trade
B. double coincidence of wants
C. convenience of exchange
D. division of labor

Answer: B Reference:

Explanation:

Type: Multiple Choice

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

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

Answer: C Reference:

Explanation:

Type: Multiple Choice

*5.* In macroeconomics, a _______________ describes the common way in which market values are measured in an economy.

A. unit of account
B. medium of exchange
C. store of value
D. unit of exchange

Answer: A Reference:

Explanation:

Type: Multiple Choice

*6.* In uncertain economic times, ____________________ serves as a way of preserving economic value that can be spent or consumed in the future.

A. buying a new car
B. owning gold
C. refinancing your home mortgage
D. obtaining a credit card

Answer: B Reference:

Explanation:

Type: Multiple Choice

*7.* In modern economies, credit cards are a _________________ because of their wide acceptance as a method of payment for both goods and services.

A. unit of exchange
B. store of value
C. unit of account
D. medium of exchange

Answer: D Reference:

Explanation:

Type: Multiple Choice

*8.* ________________ serves society in three functions: medium of exchange, unit of account, and store of value.

A. Money
B. Currency
C. Barter
D. A double coincidence of wants

Answer: A Reference:

Explanation:

Type: Multiple Choice

*9.* Lance paid $175,000 for his house in 2003 and sold it for $325,000 in 2006. What function did the house serve during the time Lance owned it?

A. medium of exchange
B. unit of account
C. store of value
D. unit of exchange

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