# Money

### Review Test

Which of the following is the best example of bartering?

Which of the following is not one of the basic functions of money?

Which of the following is the best example of how money is used as a medium of exchange?

Which of the following is the best example of how money is used as a store of value?

Which of the following best describes how money is used as a unit of account?

Which of the following is the best example of how money is liquid?

What are the two types of money?

Which of the following is the best example of commodity money?

Which of the following is the best example of fiat money?

According to the quantity theory of money, what is it that gives money value?

What do you call the real value of money?

Who controls the money supply?

Who controls the money demand?

If the money supply were decreased, what would happen to the price level?

What determines the value of money?

What is the cause of inflation, according to the quantity theory of money?

What is the name for the rate that money changes hands in an economy?

What is the equation that describes the quantity theory of money?

In the equation for the quantity theory of money, what term describes nominal output?

Using the equation for the quantity theory of money, what is the price level if V = 10, M = 100, and Y = 50?

Using the equation for the quantity theory of money, what is the price level if V = 5, M = 50, and Y = 125?

Using the equation for the quantity theory of money, what is the percent change in the price level if V changes by 3%, M changes by 2%, and Y changes by 4%?

Using the equation for the quantity theory of money, what is the percent change in the price level if V changes by 1%, M changes by 3%, and Y changes by 4%?

What is the most important variable in the mediation of changes in the money supply?

When money changes hands slowly, what is the value of the velocity of money?

When there are few dollar bills in circulation, what is the size of the money supply?

When it takes a large amount of currency to purchase goods and services, what is the price level?

When there is a large quantity of goods and services being produced, what is the size of output?

How does the equation for the velocity of money differ in the short run from in the long run?

If the price level increases by 3%, what is the inflation rate over that period?

What do you call the payment borrowers give to lenders in return for the use of money?

If inflation is present, is it a good idea for a lender to lend at a rate of interest below the expected inflation rate?

If there is no inflation present, is it a good idea for a lender to lend at a rate of interest near zero?

Which of the following is the best example of defaulting?

How does a high risk of default affect the interest rate on a loan?

What do you call interest paid on interest?

How much interest is paid on a loan of \$20,000 for 1 year at 8%?

What is the minimum interest rate that a lender should charge if there is no risk of default and inflation is expected to be 3%?

What do you call an interest rate that takes into account the effect of inflation?

Which interest rate is usually reported when a loan is made?

How are the real interest rate, the nominal interest rate, and the rate of inflation related?

What do you call the point for point relationship between the nominal interest rate and the real interest rate?

What is the real interest rate if the nominal interest rate is 6% and inflation is 3%?

What is the nominal interest rate if the real interest rate is 5% and inflation is 1%?

Can the inflation rate decrease?

Which of the following is not a real for interest?

What is the relationship between the velocity of money and the use of credit cards?

How does inflation affect money stored in a mattress?

When the Fed changes the size of the money supply, how are credit cards affected?

When is the quantity theory of money most useful?

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