Exam 29: The Monetary System

The gold standard is used as the basis for a nation's money supply.

Modern banking systems have reserve-deposit ratios of more than 100%, and are called fractional-reserve banking systems.

There is a _____:

Imagine a simple world in which currency is the only form of money.If there is only a depository bank and the total quantity of currency is $100, then the total supply of money will be:

When money takes the form of a commodity with intrinsic value, it is called a:

If the cash rate is increased, the RBA is trying to:

In Econland, all $5 000 000 in currency is held by banks as reserves.The public does not hold any currency.If the banks' desired reserve-deposit ratio is 10 per cent, the money supply in Econland equals:

If the reserve ratio is 10 per cent and a bank holds $1000 in deposits, then the bank must hold $100 in reserve.

The value of money:

If you deposited $100 of your currency into a bank, and the reserve ratio were five per cent, then the banking system could create as much as $1900 in additional money.

If the actual reserve-deposit ratio equals eight per cent and the desired reserve-deposit ratio for this bank is 10 per cent, the bank should:

Which of the following statements about credit cards is correct?

The Reserve Bank can affect the money supply indirectly through its control of the supply of bank reserves.

Money has three main functions.It is a medium of exchange, a unit of account and is used as a store of value.

The M1 measure of money consists of the sum of:

What are the problems facing the RBA in its management of the money supply?

When money is used as a means to hold wealth, it serves as a:

If the public switches from doing most of its shopping with currency to using cheques instead, and the Reserve Bank takes no action, the money supply will:

A relatively narrow measure of money is M3, which includes currency and cheque accounts.

What is the money multiplier?