Question 1

The most comprehensive measure of aggregate output is ________.

Accepted Answer

A)  gross domestic product 
B)  net national product 
C)  the TSE Index 
D)  national income 
A)  gross domestic product 
B)  net national product 
C)  the TSE Index 
D)  national income A

Question 2

The market where one currency is converted into another currency is called the ________ market.

Accepted Answer

A)  security 
B)  bond 
C)  derivatives 
D)  foreign exchange 
A)  security 
B)  bond 
C)  derivatives 
D)  foreign exchange D

Question 3

________ theory relates changes in the quantity of money to changes in aggregate economic activity and the price level.

Accepted Answer

A)  Monetary 
B)  Fiscal 
C)  Financial 
D)  Systemic 
A)  Monetary 
B)  Fiscal 
C)  Financial 
D)  Systemic A

Question 4

If real GDP grows to $9.5 trillion in 2014 from $9 trillion in 2013, the growth rate for real GDP is ________.

Accepted Answer

A)  6 percent 
B)  10 percent 
C)  5 percent 
D)  0.5 percent 
A)  6 percent 
B)  10 percent 
C)  5 percent 
D)  0.5 percent

Question 5

What happens to economic growth and unemployment during a business cycle recession? What is the relationship between the money growth rate and a business cycle recession?

Accepted Answer

During a recession, output dec

Question 6

Which of the following are the largest financial intermediaries in the Canadian economy?

Accepted Answer

A)  Insurance companies 
B)  Finance companies 
C)  Banks 
D)  Mutual funds 
A)  Insurance companies 
B)  Finance companies 
C)  Banks 
D)  Mutual funds

Question 7

Banks are important to the study of money and the economy because they ________.

Accepted Answer

A)  channel funds from investors to savers 
B)  have been a source of rapid financial innovation 
C)  are the only important financial institution in the US economy 
D)  create inflation 
A)  channel funds from investors to savers 
B)  have been a source of rapid financial innovation 
C)  are the only important financial institution in the US economy 
D)  create inflation

Question 8

Channelling funds from individuals with savings to those desiring funds when the saver does not purchase the borrower's security is known as ________.

Accepted Answer

A)  barter 
B)  redistribution 
C)  financial intermediation 
D)  taxation 
A)  barter 
B)  redistribution 
C)  financial intermediation 
D)  taxation

Question 9

If an economy has aggregate output of $2 trillion, then aggregate income is ________.

Accepted Answer

A)  $1 trillion 
B)  $2 trillion 
C)  $3 trillion 
D)  $4 trillion 
A)  $1 trillion 
B)  $2 trillion 
C)  $3 trillion 
D)  $4 trillion

Question 10

Evidence from business cycle fluctuations in Canada indicates that ________.

Accepted Answer

A)  a negative relationship between money growth and general economic activity exists 
B)  recessions have been preceded by declines in share prices on the stock exchange 
C)  recessions have been preceded by dollar depreciation 
D)  recessions have been preceded by a decline in the growth rate of money 
A)  a negative relationship between money growth and general economic activity exists 
B)  recessions have been preceded by declines in share prices on the stock exchange 
C)  recessions have been preceded by dollar depreciation 
D)  recessions have been preceded by a decline in the growth rate of money

Question 11

If ten years ago the prices of the items bought last month by the average consumer would have been much lower, then one can likely conclude that ________.

Accepted Answer

A)  the aggregate price level has declined during this ten-year period 
B)  the average inflation rate for this ten-year period has been positive 
C)  the average rate of money growth for this ten-year period has been positive 
D)  the aggregate price level has risen during this ten-year period 
A)  the aggregate price level has declined during this ten-year period 
B)  the average inflation rate for this ten-year period has been positive 
C)  the average rate of money growth for this ten-year period has been positive 
D)  the aggregate price level has risen during this ten-year period

Question 12

Everything else held constant, a decrease in the value of the Canadian dollar relative to all foreign currencies means that the price of foreign goods purchased by Canadians ________.

Accepted Answer

A)  increases 
B)  decreases 
C)  remains unchanged 
D)  increases initially but then decreases 
A)  increases 
B)  decreases 
C)  remains unchanged 
D)  increases initially but then decreases

Question 13

A sharp increase in the growth of the money supply is likely followed by ________.

Accepted Answer

A)  a recession 
B)  a depression 
C)  an increase in the inflation rate 
D)  no change in the economy 
A)  a recession 
B)  a depression 
C)  an increase in the inflation rate 
D)  no change in the economy

Question 14

If real GDP in 2013 is $10 trillion, and in 2014 real GDP is $9.5 trillion, then real GDP growth from 2013 to 2014 is ________.

Accepted Answer

A)  0.5 percent 
B)  5 percent 
C)  0 percent 
D)  -5 percent 
A)  0.5 percent 
B)  5 percent 
C)  0 percent 
D)  -5 percent

Question 15

The gross domestic product is the ________.

Accepted Answer

A)  the value of all wealth in an economy 
B)  the value of all goods and services sold to other nations in a year 
C)  the market value of all final goods and services produced in an economy in a year 
D)  the market value of all intermediate goods and services produced in an economy in a year 
A)  the value of all wealth in an economy 
B)  the value of all goods and services sold to other nations in a year 
C)  the market value of all final goods and services produced in an economy in a year 
D)  the market value of all intermediate goods and services produced in an economy in a year

Question 16

Everything else constant, a stronger Canadian dollar will mean that ________.

Accepted Answer

A)  vacationing in England becomes more expensive 
B)  vacationing in England becomes less expensive 
C)  French cheese becomes more expensive 
D)  Japanese cars become more expensive 
A)  vacationing in England becomes more expensive 
B)  vacationing in England becomes less expensive 
C)  French cheese becomes more expensive 
D)  Japanese cars become more expensive

Question 17

Inflation ________.

Accepted Answer

A)  can be explained by changes in the price level and money supply 
B)  cannot be explained historically 
C)  is unrelated to monetary variables 
D)  changes in government policy 
A)  can be explained by changes in the price level and money supply 
B)  cannot be explained historically 
C)  is unrelated to monetary variables 
D)  changes in government policy

Question 18

What is the aggregate income? How is the aggregate income related to the gross domestic product?

Accepted Answer

Aggregate income is

Question 19

Which of the following is a true statement?

Accepted Answer

A)  Money or the money supply is defined as Bank of Canada notes. 
B)  The average price of goods and services in an economy is called the aggregate price level. 
C)  The inflation rate is measured as the rate of change in the federal government budget deficit. 
D)  The aggregate price level is measured as the rate of change in the inflation rate. 
A)  Money or the money supply is defined as Bank of Canada notes. 
B)  The average price of goods and services in an economy is called the aggregate price level. 
C)  The inflation rate is measured as the rate of change in the federal government budget deficit. 
D)  The aggregate price level is measured as the rate of change in the inflation rate.

Question 20

When prices are measured in terms of fixed (base-year) prices they are called ________ prices.

Accepted Answer

A)  nominal 
B)  real 
C)  inflated 
D)  aggregate 
A)  nominal 
B)  real 
C)  inflated 
D)  aggregate

Exam 1: Why Study Money, Banking, and Financial Markets

The most comprehensive measure of aggregate output is ________.

The market where one currency is converted into another currency is called the ________ market.

________ theory relates changes in the quantity of money to changes in aggregate economic activity and the price level.

If real GDP grows to $9.5 trillion in 2014 from $9 trillion in 2013, the growth rate for real GDP is ________.

What happens to economic growth and unemployment during a business cycle recession? What is the relationship between the money growth rate and a business cycle recession?

Which of the following are the largest financial intermediaries in the Canadian economy?

Banks are important to the study of money and the economy because they ________.

Channelling funds from individuals with savings to those desiring funds when the saver does not purchase the borrower's security is known as ________.

If an economy has aggregate output of $2 trillion, then aggregate income is ________.

Evidence from business cycle fluctuations in Canada indicates that ________.

If ten years ago the prices of the items bought last month by the average consumer would have been much lower, then one can likely conclude that ________.

Everything else held constant, a decrease in the value of the Canadian dollar relative to all foreign currencies means that the price of foreign goods purchased by Canadians ________.

A sharp increase in the growth of the money supply is likely followed by ________.

If real GDP in 2013 is $10 trillion, and in 2014 real GDP is $9.5 trillion, then real GDP growth from 2013 to 2014 is ________.

The gross domestic product is the ________.

Everything else constant, a stronger Canadian dollar will mean that ________.

Inflation ________.

What is the aggregate income? How is the aggregate income related to the gross domestic product?

Which of the following is a true statement?

When prices are measured in terms of fixed (base-year) prices they are called ________ prices.

An Overview of the Financial System

What Is Money

The Meaning of Interest Rates

The Behaviour of Interest Rates

The Risk and Term Structure of Interest Rates

The Stock Market, the Theory of Rational Expectations, and the Efficient Market Hypothesis

An Economic Analysis of Financial Structure

Economic Analysis of Financial Regulation

Banking Industry: Structure and Competition

Financial Crises

Banking and the Management of Financial Institutions

Risk Management With Financial Derivatives

Central Banks and the Bank of Canada

The Money Supply Process

Tools of Monetary Policy

The Conduct of Monetary Policy: Strategy and Tactics

The Foreign Exchange Market

The International Financial System

Quantity Theory, Inflation, and the Demand for Money

The Is Curve

The Monetary Policy and Aggregate Demand Curves

Aggregate Demand and Supply Analysis

Monetary Policy Theory

The Role of Expectations in Monetary Policy

Transmission Mechanisms of Monetary Policy

Filters