20. Money is anything that: A) serves as a medium of exchange for goods and serv
ID: 1128105 • Letter: 2
Question
20. Money is anything that: A) serves as a medium of exchange for goods and services. C) D) ) can be converted into gold with relatively little loss in value. is traded in the stock market. can be converted into silver with relatively little loss in value. Use the following to answer question 21 Figure: Change in the Demand for U.S. Dollars Euros per U.S. dollar Supply of U.S. dolars X2 Et 02 Quantity of U.S. dollars 21. (Figure: Change in the Demand for U.S. Dollars) Refer to the information in the figure Change in the Demand for U.S. Dollars. The change from Di to Da will occur, all other things being equal, if the: A) supply of euros decreases. B) demand for euros increases. C) demand for euros decreases. D) demand for dollars increases. 22. Bank reserves can be held in the form of A) loans and cash in the bank's vault B) loans and deposits with the Fed C) loans and checking accounts D) deposits with the Fed and cash in the bank's vault million of U.S. Treasury bills. Which would be the end result of such an action? A) The money supply would stay the same. B) The money supply would decrease by $100 million. 23. Suppose the Federal Reserve were to engage in open-market operations by buying $100 C) D) The money supply would increase by $100 million. The money supply would increase by more than $100 million.Explanation / Answer
Ans)
20.
A. serves as a medium of exchnage for goods and services.
Money is anything which serves as a medium of exchange.
21.
D) demand for dollars increases.
A shift from D1 to D2 is associated with a change in the demand curve from D1 to D2.Since the graph shows the demand and supply of Dollars, it is associated with an increase in demand for dollars.
22.
D)deposits with the Fed and cash in the bank's vault.
Bank reserves are a banks reserves holding with the Fed and the cash in vaults.
23.
D) The money supply would increase by more than $100 million
If the Fed buys bills it increases the money supply.This increase will be more than $100 million because of the multiplier.
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