Fiat Money – Principles of Macroeconomics Final Exam

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Fiat Money, Function of Money, Medium of Exchange, Principles of Macroeconomics Final

The key words in this Macroeconomics course include Fiat Money, Cash, Function of Money, Medium of Exchange, Deposits, Balance Sheet. Assets, Liabilities, Principles of Macroeconomics.


What function of money is highlighted when Sally pays her cell phone bill with cash?

commodity money

medium of exchange

fiat money

store of value

unit of account


Money does NOT function as a(n)

store of value.

item to barter.

unit of account.

medium of exchange.

means to buy goods and services.


Refer to the following table to answer the following questions:

Checkable deposits$800,500,000
Currency$340,000,000
Traveler’s checks$10,000,000
Money market mutual funds$78,000,000
Small time deposits$15,000,000
Savings deposits$252,000,000



What is the value of M2 that is not part of M1?

$345,000,000

$1,150,500,000

$1,495,500,000

$93,000,000

$78,000,000


Refer to the following table to answer the following questions:

Checkable deposits$800,500,000
Currency$340,000,000
Traveler’s checks$10,000,000
Money market mutual funds$78,000,000
Small time deposits$15,000,000
Savings deposits$252,000,000



What is the value of M2?

$78,000,000

$1,150,500,000

$93,000,000

$1,495,500,000

$345,000,000


Which of the following is NOT a characteristic of fiat money?

serves as a unit of account

always backed by something of high intrinsic value

provides a way to store wealth over time

generally acceptable as a medium of exchange

changes in value over time as the amount of fiat money changes


Tom Goldman deposits $1,000 in newly printed birthday cash into his checking account at the bank. How would this be recorded on the bank’s balance sheet?

There will be no initial change to assets and liabilities.

Assets and liabilities will both rise by $1,000.

Assets will fall by $1,000 and liabilities will rise by $1,000.

Assets will rise by $1,000 and liabilities will fall by $1,000.

Assets and liabilities will both fall by $1,000.