Question 1

In the contemporary Canadian economy, the best example of fiat money would be

Accepted Answer

A)  coins issued by the Bank of Canada. 
B)  deposits at all depository institutions. 
C)  deposits at chartered banks, but not deposits at other depository institutions. 
D)  the stock of notes issued by the Bank of Canada. 
E)  the stock of notes in the foreign exchange market. 
A)  coins issued by the Bank of Canada. 
B)  deposits at all depository institutions. 
C)  deposits at chartered banks, but not deposits at other depository institutions. 
D)  the stock of notes issued by the Bank of Canada. 
E)  the stock of notes in the foreign exchange market.

Question 2

In Canadian history, use of a commodity-backed paper currency is associated with the

Accepted Answer

A)  free banking era. 
B)  Second World War. 
C)  gold standard. 
D)  Bretton Woods agreement. 
E)  Great Depression. 
A)  free banking era. 
B)  Second World War. 
C)  gold standard. 
D)  Bretton Woods agreement. 
E)  Great Depression.

Question 3

Credit cards should not be considered a form of money because

Accepted Answer

A)  credit cards are not universally accepted. 
B)  a credit card can only be used by the cardholder. 
C)  money and credit are fundamentally different. 
D)  they are too susceptible to fraud. 
E)  they are not a good medium of exchange. 
A)  credit cards are not universally accepted. 
B)  a credit card can only be used by the cardholder. 
C)  money and credit are fundamentally different. 
D)  they are too susceptible to fraud. 
E)  they are not a good medium of exchange.

Question 4

The optimal trade-off between current leisure and current consumption goods is expressed as

Accepted Answer

A)  MRS1,C = $ \frac{w}{1+P} $ 
B)  MRS1,C = w. 
C)  MRS1,C  = $ \frac{w}{(1+R)} $ 
D)  MRS1,C  = $ \frac{w}{(1+r)} $ 
E)  MRS1,C  = $ \frac{1+r}{(1+R)} $ 
A)  MRS1,C = $ \frac{w}{1+P} $ 
B)  MRS1,C = w. 
C)  MRS1,C  = $ \frac{w}{(1+R)} $ 
D)  MRS1,C  = $ \frac{w}{(1+r)} $ 
E)  MRS1,C  = $ \frac{1+r}{(1+R)} $

Question 5

The Fisher relationship may be described by the following equation in which R is the nominal rate of interest, r is the real rate of interest, and i is the inflation rate.

Accepted Answer

A)  i = r + R 
B)  1 + i =   
C)  1 + r =   
D)  1 + r =   
E)  R = r + i 
A)  i = r + R 
B)  1 + i =   
C)  1 + r =   
D)  1 + r =   
E)  R = r + i

Question 6

In the monetary intertemporal model, the long-run effects of an increase in the money supply growth rate include

Accepted Answer

A)  an increase in output and an increase in the real wage. 
B)  an increase in output and a decrease in the real wage. 
C)  a decrease in output and an increase in the real wage. 
D)  a decrease in output and a decrease in the real wage. 
E)  an increase in output and a decrease in the real interest rate. 
A)  an increase in output and an increase in the real wage. 
B)  an increase in output and a decrease in the real wage. 
C)  a decrease in output and an increase in the real wage. 
D)  a decrease in output and a decrease in the real wage. 
E)  an increase in output and a decrease in the real interest rate.

Question 7

The maturity of a 30-year bond that makes coupon payments is

Accepted Answer

A)  somewhat less than 30 years. 
B)  exactly 30 years. 
C)  somewhat more than 30 years. 
D)  uncertain. 
E)  up to the discretion of the issuer. 
A)  somewhat less than 30 years. 
B)  exactly 30 years. 
C)  somewhat more than 30 years. 
D)  uncertain. 
E)  up to the discretion of the issuer.

Question 8

Widespread use of deposit banking and the use of cheques in transactions in Canada

Accepted Answer

A)  dates back to the 19th century. 
B)  first occurred shortly after World War I. 
C)  first occurred in the early 20th century. 
D)  has slowly developed, and the volume of transactions by cheques has surpassed the volume of transactions by cash only since the early 1980s. 
E)  first occurred shortly after World War II. 
A)  dates back to the 19th century. 
B)  first occurred shortly after World War I. 
C)  first occurred in the early 20th century. 
D)  has slowly developed, and the volume of transactions by cheques has surpassed the volume of transactions by cash only since the early 1980s. 
E)  first occurred shortly after World War II.

Question 9

The causal link between money growth and inflation is most closely associated with

Accepted Answer

A)  Jevons. 
B)  Kiyotaki and Wright. 
C)  Friedman and Schwartz. 
D)  Diamond and Dybvig. 
E)  Kydland and Prescott. 
A)  Jevons. 
B)  Kiyotaki and Wright. 
C)  Friedman and Schwartz. 
D)  Diamond and Dybvig. 
E)  Kydland and Prescott.

Question 10

A system that uses commodity-backed paper currency is most like a system that

Accepted Answer

A)  uses circulating private bank notes. 
B)  uses fiat money. 
C)  primarily relies on transaction deposits at banks. 
D)  uses commodity money. 
E)  primarily relied on financial intermediaries. 
A)  uses circulating private bank notes. 
B)  uses fiat money. 
C)  primarily relies on transaction deposits at banks. 
D)  uses commodity money. 
E)  primarily relied on financial intermediaries.

Question 11

The Diamond-Dybvig model provides a rationale for the phenomenon of

Accepted Answer

A)  undercapitalized banks. 
B)  banks making overly risky loans. 
C)  bank runs. 
D)  deflation. 
E)  banks carrying too many illiquid assets. 
A)  undercapitalized banks. 
B)  banks making overly risky loans. 
C)  bank runs. 
D)  deflation. 
E)  banks carrying too many illiquid assets.

Question 12

A system that uses commodity-based paper currency was used in Canada

Accepted Answer

A)  only during the Great Depression. 
B)  only during World War II. 
C)  before 1929. 
D)  only after World War II. 
E)  only during the 1960s and 1970s. 
A)  only during the Great Depression. 
B)  only during World War II. 
C)  before 1929. 
D)  only after World War II. 
E)  only during the 1960s and 1970s.

Question 13

The double coincidence of wants problem is solved by

Accepted Answer

A)  credit markets. 
B)  government intervention. 
C)  the use of money. 
D)  specialization. 
E)  the barter system. 
A)  credit markets. 
B)  government intervention. 
C)  the use of money. 
D)  specialization. 
E)  the barter system.

Question 14

In the monetary intertemporal model, money is

Accepted Answer

A)  neutral but not superneutral. 
B)  superneutral but not neutral. 
C)  superneutral. 
D)  unrelated to the inflation rate. 
E)  superneutral only if the Fisher effect is large. 
A)  neutral but not superneutral. 
B)  superneutral but not neutral. 
C)  superneutral. 
D)  unrelated to the inflation rate. 
E)  superneutral only if the Fisher effect is large.

Question 15

Which asset is most liquid?

Accepted Answer

A)  a house 
B)  currency 
C)  a government bond 
D)  a bank deposit 
E)  a stock 
A)  a house 
B)  currency 
C)  a government bond 
D)  a bank deposit 
E)  a stock

Question 16

In Canada, the Canada Deposit Insurance Corporation (CDIC)insures the value of chartered bank deposits up to

Accepted Answer

A)  $50,000. 
B)  $100,000. 
C)  $500,000. 
D)  $1,000,000. 
E)  $2,000,000. 
A)  $50,000. 
B)  $100,000. 
C)  $500,000. 
D)  $1,000,000. 
E)  $2,000,000.

Question 17

The argument that deposit insurance can prevent the failure of an otherwise sound bank is based on the idea that

Accepted Answer

A)  bank examinations by the Canada Deposit Insurance Corporation (CDI
C)  weed out badly managed banks. 
B)  the existence of deposit insurance may prevent self-fulfilling panics. 
C)  potential deposits need not be concerned about account overdrafts. 
D)  deposit insurance restores confidence in the stock market. 
E)  deposit insurance restores confidence in the bond market. 
A)  bank examinations by the Canada Deposit Insurance Corporation (CDI
C)  weed out badly managed banks. 
B)  the existence of deposit insurance may prevent self-fulfilling panics. 
C)  potential deposits need not be concerned about account overdrafts. 
D)  deposit insurance restores confidence in the stock market. 
E)  deposit insurance restores confidence in the bond market.

Question 18

Circulating private bank notes

Accepted Answer

A)  have never been used in Canada. 
B)  were widely used in Canada prior to 1935. 
C)  were only widely used in Canada during the Great Depression. 
D)  are still currently in use in Canada. 
E)  were only widely used in Canada after World War II. 
A)  have never been used in Canada. 
B)  were widely used in Canada prior to 1935. 
C)  were only widely used in Canada during the Great Depression. 
D)  are still currently in use in Canada. 
E)  were only widely used in Canada after World War II.

Question 19

If the Friedman rule for long-term monetary policy were implemented, the result would be

Accepted Answer

A)  inflation. 
B)  neither inflation nor deflation. 
C)  deflation. 
D)  hyperinflation. 
E)  constant inflation. 
A)  inflation. 
B)  neither inflation nor deflation. 
C)  deflation. 
D)  hyperinflation. 
E)  constant inflation.

Question 20

According to a study by Thomas Cooley and Gary Hansen, the cost in lost consumption of a 10% per annum rate of inflation is

Accepted Answer

A)  negative. 
B)  approximately 0.001%. 
C)  approximately 0.5%. 
D)  approximately 5.0%. 
E)  approximately 0.14%. 
A)  negative. 
B)  approximately 0.001%. 
C)  approximately 0.5%. 
D)  approximately 5.0%. 
E)  approximately 0.14%.

In the contemporary Canadian economy, the best example of fiat money would be

In Canadian history, use of a commodity-backed paper currency is associated with the

Credit cards should not be considered a form of money because

The optimal trade-off between current leisure and current consumption goods is expressed as

The Fisher relationship may be described by the following equation in which R is the nominal rate of interest, r is the real rate of interest, and i is the inflation rate.

In the monetary intertemporal model, the long-run effects of an increase in the money supply growth rate include

The maturity of a 30-year bond that makes coupon payments is

Widespread use of deposit banking and the use of cheques in transactions in Canada

The causal link between money growth and inflation is most closely associated with

A system that uses commodity-backed paper currency is most like a system that

The Diamond-Dybvig model provides a rationale for the phenomenon of

A system that uses commodity-based paper currency was used in Canada

The double coincidence of wants problem is solved by

In the monetary intertemporal model, money is

Which asset is most liquid?

In Canada, the Canada Deposit Insurance Corporation (CDIC)insures the value of chartered bank deposits up to

The argument that deposit insurance can prevent the failure of an otherwise sound bank is based on the idea that

Circulating private bank notes

If the Friedman rule for long-term monetary policy were implemented, the result would be

According to a study by Thomas Cooley and Gary Hansen, the cost in lost consumption of a 10% per annum rate of inflation is

Introduction

Measurement

Business Cycle Measurement

Consumer and Firm Behaviour: The Work–Leisure Decision and Profit Maximization

A Closed-Economy One-Period Macroeconomic Model

Search and Unemployment

Economic Growth: Malthus and Solow

Income Disparity among Countries and Endogenous Growth

A Two-Period Model: The Consumption–Savings Decision and Credit Markets

Credit Market Imperfections: Credit Frictions, Financial Crises, and Social Security

A Real Intertemporal Model with Investment

A Monetary Intertemporal Model: Money, Banking, Prices, and Monetary Policy

Business Cycle Models with Flexible Prices and Wages

New Keynesian Economics: Sticky Prices

Inflation: Phillips Curves and Neo-Fisherism

International Trade in Goods and Assets

Money in the Open Economy

Filters

Exam 18: Money, Inflation, and Banking: A Deeper Look

In the contemporary Canadian economy, the best example of fiat money would be

In Canadian history, use of a commodity-backed paper currency is associated with the

Credit cards should not be considered a form of money because

The optimal trade-off between current leisure and current consumption goods is expressed as

The Fisher relationship may be described by the following equation in which R is the nominal rate of interest, r is the real rate of interest, and i is the inflation rate.

In the monetary intertemporal model, the long-run effects of an increase in the money supply growth rate include

The maturity of a 30-year bond that makes coupon payments is

Widespread use of deposit banking and the use of cheques in transactions in Canada

The causal link between money growth and inflation is most closely associated with

A system that uses commodity-backed paper currency is most like a system that

The Diamond-Dybvig model provides a rationale for the phenomenon of

A system that uses commodity-based paper currency was used in Canada

The double coincidence of wants problem is solved by

In the monetary intertemporal model, money is

Which asset is most liquid?

In Canada, the Canada Deposit Insurance Corporation (CDIC)insures the value of chartered bank deposits up to

The argument that deposit insurance can prevent the failure of an otherwise sound bank is based on the idea that

Circulating private bank notes

If the Friedman rule for long-term monetary policy were implemented, the result would be

According to a study by Thomas Cooley and Gary Hansen, the cost in lost consumption of a 10% per annum rate of inflation is

Introduction

Measurement

Business Cycle Measurement

Consumer and Firm Behaviour: The Work–Leisure Decision and Profit Maximization

A Closed-Economy One-Period Macroeconomic Model

Search and Unemployment

Economic Growth: Malthus and Solow

Income Disparity among Countries and Endogenous Growth

A Two-Period Model: The Consumption–Savings Decision and Credit Markets

Credit Market Imperfections: Credit Frictions, Financial Crises, and Social Security

A Real Intertemporal Model with Investment

A Monetary Intertemporal Model: Money, Banking, Prices, and Monetary Policy

Business Cycle Models with Flexible Prices and Wages

New Keynesian Economics: Sticky Prices

Inflation: Phillips Curves and Neo-Fisherism

International Trade in Goods and Assets

Money in the Open Economy

Filters