Question 3 (1.75 pts) For each element in Column A, on your answer sheet write the letter corresponding to the correct element in Column B Column A Column B 1) Excess Reserves (A) The ease of use of an asset as a medium of exchange 2) Deflation (B) A measure of the money supply that includes currency, checkable deposits and traveler's checks 3) Required Reserves (C) When the aggregate price level falls 4) Fiat Money (D) The portion of bank reserves that banks must keep as reserves 5) M1 Money (E) The portion of bank reserves that banks are permitted to lend to their customers 6) Financial Intermediary (F) A medium of exchange that is accepted as money because the government says it has value 7) Liquidity (G) An institution such as a bank, saving and loan association, or life insurance company that accepts funds from savers and makes loans to borrowersQuestion 1 (1 pts) Determine whether each of the following belongs on the asset side or on the liability side of the balance sheet identified in parentheses. On your answer sheet write A for "Asset side" and L for "Liability Side" a) $20,000 loan for a new automobile (balance sheet for an individual) b) 10-year government bond (balance sheet for a bank) c) $500 in cash (balance sheet for an individual) d) $10,000 student loan (balance sheet for a bank) Question 2 (0.75 pts) Determine whether each of the following statements are true or false. On your answer sheet write T for "True", F for "False" a) Inflation creates "menu costs" b) Inflation reduces uncertainty c) Inflation hurts people on fixed incomesQuestion 4 (0.5 pts) Depositing money in a checkable account at a commercial bank, a customer can indirectly contribute to increase money supply, because the bank can make new loans with the additional deposits. This statement is (write a for \"True", 1: for \"False\") a] True b] False Question 5 (0.5 pts) When lending money to an individual, a commercial bank credits the individual's account by the amount of money agreed in the loan. In doing so, the commercial bank increases M1 This statement is (write a for \"True", b for \"False"J a} True is} False