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

1.Foreign currency deposits of residents booked in Canada 2.Personal savings deposits at the chartered banks 3)Currency (coins and paper money) 4)Demand deposits 5)Government securities 6)Non-personal notice deposits at the chartered banks Refer to the above information.The M2 definition of money includes:

A bank's actual cash reserves can be found by:

A bank which has liabilities of $150 billion and a net worth of $20 billion must have:

In terms of volume or dollar amount, most of the money in our economy is created by:

The following balance sheet shows the assets and liabilities of the ABC National Bank.Assume the desired reserve ratio is 20 percent. Refer to the above information.If the bank safely expands its loans by the maximum, the bank will now have excess reserves of:

The chartered banking system can lend by a multiple of its excess reserves primarily because:

Fiat money is valuable because:

If the desired reserve ratio is 10 percent, how much excess reserves does a bank acquire when a business deposits a $500 cheque drawn on another bank?

The multiple by which the chartered banking system can expand the supply of money is equal to the reciprocal of:

Given a 25 percent desired reserve ratio, assume the chartered banking system is loaned up.Now assume the desired reserve ratio falls to 20 percent.As a result of this reduction:

Securitization is the process of slicing up and bundling groups of loans, mortgages, corporate bonds and other financial debts into distinct new securities.

In Canada the money supply (M1) is comprised of:

If the value of the dollar is falling, then it follows that:

When a consumer wants to compare the price of one product with another, money is primarily functioning as a:

Money is destroyed when:

The main goal of a chartered bank is liquidity.

Which of the following business assets is normally the most liquid?

The granting of a $10,000 loan and the purchase of a $10,000 government securities from a securities dealer by a chartered bank have the same effect on the money supply.

The higher desired reserve ratio, the lower is the monetary multiplier.

The functions of money are to serve as a: