Question 1

Securitization is:

Accepted Answer

A) the process of slicing up and bundling groups of loans, mortgages, corporate bonds and other financial debts into distinct new securities. 
B) the securing of loans, mortgages, corporate bonds and other financial debts by governments. 
C) a guarantee that loans, mortgages, corporate bonds and other financial debts were secure. 
D) the process of securing loans, mortgages, corporate bonds and other financial debts by insurance companies. 
A) the process of slicing up and bundling groups of loans, mortgages, corporate bonds and other financial debts into distinct new securities. 
B) the securing of loans, mortgages, corporate bonds and other financial debts by governments. 
C) a guarantee that loans, mortgages, corporate bonds and other financial debts were secure. 
D) the process of securing loans, mortgages, corporate bonds and other financial debts by insurance companies.

Question 2

Demand deposits are classified as money because:

Accepted Answer

A) they can be readily used in the making of purchases and payment of debts. 
B) banks hold currency equal to the value of their outstanding deposits. 
C) they are ultimately the obligations of the government. 
D) they earn interest income for the depositor. 
A) they can be readily used in the making of purchases and payment of debts. 
B) banks hold currency equal to the value of their outstanding deposits. 
C) they are ultimately the obligations of the government. 
D) they earn interest income for the depositor.

Question 3

Under the Canadian federal law, the institution that is in charge of inter-bank cheque system is called:

Accepted Answer

A) Canadian Financial Association. 
B) Canadian Banking Association. 
C) Canadian Payments Association. 
D) Canadian Chartered Banks Association. 
A) Canadian Financial Association. 
B) Canadian Banking Association. 
C) Canadian Payments Association. 
D) Canadian Chartered Banks Association.

Question 4

Which of the following is correct?

Accepted Answer

A) Desired reserves minus actual reserves equal excess reserves. 
B) Desired reserves equal excess reserves minus actual reserves. 
C) Desired reserves equal actual reserves plus excess reserves. 
D) Actual cash reserves minus desired reserves equal excess reserves. 
A) Desired reserves minus actual reserves equal excess reserves. 
B) Desired reserves equal excess reserves minus actual reserves. 
C) Desired reserves equal actual reserves plus excess reserves. 
D) Actual cash reserves minus desired reserves equal excess reserves.

Question 5

Chartered banks increase the supply of money when they purchase either personal IOUs or government bonds from businesses and households.

Accepted Answer

A) True 
 B)False

Question 6

If D equals the maximum amount of new demand-deposit money that can be created by the banking system on the basis of any given amount of excess reserves; E equals the amount of excess reserves; and m is the money multiplier, then we can say that:

Accepted Answer

A) m = E/D. 
B) D = E * m. 
C) D = E - 1/m. 
D) D = m/E. 
A) m = E/D. 
B) D = E * m. 
C) D = E - 1/m. 
D) D = m/E.

Exam 14: B: Money, Banking, and Money Creation

Securitization is:

Demand deposits are classified as money because:

Under the Canadian federal law, the institution that is in charge of inter-bank cheque system is called:

Which of the following is correct?

Chartered banks increase the supply of money when they purchase either personal IOUs or government bonds from businesses and households.

If D equals the maximum amount of new demand-deposit money that can be created by the banking system on the basis of any given amount of excess reserves; E equals the amount of excess reserves; and m is the money multiplier, then we can say that:

B: Limits, Alternatives, and Choices

A: - Limits, Alternatives, and Choices

B: The Market System and the Circular Flow

A: - The Market System and the Circular Flow

B: Demand, Supply, and Market Equilibrium

A: - Demand, Supply, and Market Equilibrium

B: Market Failures: Public Goods and Externalities

A: - Market Failures: Public Goods and Externalities

B: Governments Role and Government Failure

A: Governments Role and Government Failure

B: an Introduction to Macroeconomics

A: an Introduction to Macroeconomics

B: Measuring the Economys Output

A: Measuring the Economys Output

B: Economic Growth

A: Economic Growth

B: Business Cycles, Unemployment, and Inflation

A: Business Cycles, Unemployment, and Inflation

B: Basic Macroeconomic Relationships

A: Basic Macroeconomic Relationships

B: The Aggregate Expenditures Model

A: The Aggregate Expenditures Model

B: Aggregate Demand and Aggregate Supply

A: Aggregate Demand and Aggregate Supply

B: Fiscal Policy, Deficits, Surpluses, and Debt

A: Fiscal Policy, Deficits, Surpluses, and Debt

A: Money, Banking, and Money Creation

B: Interest Rates and Monetary Policy

A: Interest Rates and Monetary Policy

C: Financial Economics

A: Long-Run Macroeconomic Adjustments

B: Long-Run Macroeconomic Adjustments

A: International Trade

B: International Trade

A: The Balance of Payments and Exchange Rates

B: The Balance of Payments and Exchange Rates

The Economics of Developing Countries

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