Question

In economics, money refers to A) income. B) wealth. C) assets used and accepted as payment....

  1. In economics, money refers to

A) income.

B) wealth.

C) assets used and accepted as payment.

D) currency.

  1. M1 does not include

A) Money market mutual funds.

B) travelers' checks.

C) currency.

D) transaction accounts.

  1. Which of the following statements about M1 and M2 is not true?

A) Transaction accounts are part of M1.

B) M2 is more liquid than M1.

C) M2 is larger than M1.

D) Transaction accounts are part of M2.

  1. M2 does not include

A) Treasury bonds.

B) Money market deposit accounts.

C) small-denomination time deposits.

D) M1.

  1. The excess of the nominal interest rate over the TIPS interest rate is known as the

A) interest-rate differential.

B) break-even inflation rate.

C) yield spread.

D) term structure.

  1. How does the break-even inflation rate differ from the expected inflation rate as measured in surveys?

A) They are very close to each other.

B) The break-even inflation rate varies less than the expected inflation rate from surveys.

C) The break-even inflation rate varies more than the expected inflation rate from surveys.

D) The break-even inflation

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Homework Answers

Answer #1

In economics, money refers to (D) currency which can be used for different functions of the money.

M1 does not include (A) money market mutual funds because M1 is composed of physical currency, coins, demand deposits, travelrs' cheques, other chequeble withdrawal and negotiable orde of withdrawal.

Statement which is not true: M2 is more liquid than M1. This is because liquidity refers to conversion of asset into money very quickly and M1 represents near cash whereas M2 represents assets which are not so quickly converted into money.

M2 does not include (A) Treasury Bonds

The excess of the nominal interest rate over TIPS rate is break even inflation rate because TIPS rate is provided to cover the cost of inflation taking place in the economy.

(A) they are very close to each other.

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