1 The functions of money are to serve as a Select one a dete

1. The functions of money are to serve as a

Select one:

a. determinant of consumption, investment, and government spending.

b. unit of account, store of value, and medium of exchange.

c. factor of production, exchange, and aggregate supply.

d. resource allocator, method for accounting, and means of income distribution.

2. If product prices were stated in terms of gallons of milk, then milk would be functioning primarily as:

a. a unit of account.

b. a store of value.

c. legal tender.

d. fiat money.

3. Michelle transfers $4,000 from her savings to her checking account. What effect will this change have on M1 and M2?

Select one:

a. M1 and M2 stay the same

b. M1 increases, M2 stays the same.

c. M1 decreases, M2 increases

d. M1 increases, M2 decreases.

4. What is the best explanation for the billions in American currency being held abroad?

Select one:

a. There has been a proliferation of automatic teller machines throughout the world that allow people access to U.S. currency.

b. Drug dealers and others in the underground economy are holding the money.

c. Residents in foreign nations are using U.S. currency as stable currency to make transactions

d. U.S. multinational corporations are holding the money but not reporting it.

1. b) unit of account, store of value, and medium of exchange.

2. a) A unit of account

3. b) M1 increases, M2 stays the same