Sections
Review Questions
Review Questions
7.
What are the four functions served by money?
8.
How does the existence of money simplify the process of buying and selling?
9.
What is the double-coincidence of wants?
10.
What components of money are counted as part of M1?
11.
What components of money are counted in M2?
12.
Why is a bank called a financial intermediary?
13.
What does a balance sheet show?
14.
What are the assets of a bank? What are its liabilities?
15.
How do you calculate the net worth of a bank?
16.
How can a bank end up with a negative net worth?
17.
What is the asset–liability time mismatch that all banks face?
18.
What is the risk if a bank does not diversify its loans?
19.
How do banks create money?
20.
What is the formula for the money multiplier?