Exam (elaborations)
ECN-460 Exam 1 Study Guide Questions And Answers Latest Update
- Course
- ECN 460
- Institution
- Arizona State University
ECN-460 Exam 1 Study Guide Questions And Answers Latest Update
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Solution 2024/2025Pepper
ECN-460 Exam 1 Study Guide Questions And
Answers Latest Update
Medium of exchange ANS✔✔ generally accepted for payment of goods and
services
Unit of account ANS✔✔ expression of the relative value of goods and
services
Store of value ANS✔✔ used to hold purchasing power for future use
Fiat Money examples: ANS✔✔ Paper currency like Euro note
Federal note
Fiat money pros: ANS✔✔ Portable, easily divisible
Fiat money cons: ANS✔✔ Temptation to produce too much
Commodity money examples: ANS✔✔ Precious metals
Cigarettes
Commodity money pros: ANS✔✔ Intrinsic value beyond medium of
exchange
, Solution 2024/2025
Pepper
Commodity money cons: ANS✔✔ Not easily divisible, portable, transferable
value not easily verifiable
Electronic payments example: ANS✔✔ Online bill pay like PayPal
Electronic payments pros: ANS✔✔ No transportation costs, lower transaction
costs
Electronic payments cons: ANS✔✔ Security, privacy, and identity theft
concerns
M1 ANS✔✔ Currency, traveler's checks, non-interest checking accounts,
interest-bearing checking accounts like NOW accounts; Savings deposits,
MMDA
has most liquid assets
M2 ANS✔✔ All of M1 + small denomination CDs, MMMF
True or False: using the Theory of Portfolio Choice what happens to the
demand for money with changes (decreases or increases) in LIRE: true of
false ANS✔✔ True
True or False: whenever Er goes inflation is along for the ride and vice versa
ANS✔✔ True
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