Question 1

Which of the following is not part of the M-1 money supply?

Accepted Answer

A)  Credit cards 
B)  Currency 
C)  Demand deposits 
D)  Cheques 
E)  All of these are part of M-1. 
A)  Credit cards 
B)  Currency 
C)  Demand deposits 
D)  Cheques 
E)  All of these are part of M-1.

Question 2

Currency and money are the same thing.

Accepted Answer

A) True 
 B)False

Question 3

Money serves as a medium of exchange, which means, for example, that it replaces the need for barter among individuals.

Accepted Answer

A) True 
 B)False

Question 4

The main purpose of the Bank of Canada is to

Accepted Answer

A)  set prime interest rates. 
B)  assist in the merger of troubled banks with healthier institutions. 
C)  bail out banks like the Northland and CCB. 
D)  deregulate the banking industry. 
E)  control the nation's money supply. 
A)  set prime interest rates. 
B)  assist in the merger of troubled banks with healthier institutions. 
C)  bail out banks like the Northland and CCB. 
D)  deregulate the banking industry. 
E)  control the nation's money supply.

Question 5

Douglas & Reynolds, a financial firm, has recently fallen on hard times. Its CEO notes that the firm has lost money for three straight years. Over the same period, the euro has lost 15 percent of its value, while the Chinese yuan has increased its value by 15 percent. He therefore concludes that the company should discontinue its foreign currency investments in the euro in favor of the yuan in order to increase its profits. Which of the following, if true, most weakens the CEO's argument?

Accepted Answer

A)  Over the last ten years, investments in the yuan have only marginally outperformed investments in the euro. 
B)  Research shows that a vast majority of American voters approve of European governments and disapprove of the Chinese government. 
C)  The amount of capital the company currently has invested in the euro is significantly larger than the amount invested in the yuan. 
D)  In the past six months, Europe has shown signs of recovering from a financial crisis, while China has shown signs of entering one. 
E)  A competing firm recorded record profits after shifting its investments from Japanese yen to Canadian dollars. 
A)  Over the last ten years, investments in the yuan have only marginally outperformed investments in the euro. 
B)  Research shows that a vast majority of American voters approve of European governments and disapprove of the Chinese government. 
C)  The amount of capital the company currently has invested in the euro is significantly larger than the amount invested in the yuan. 
D)  In the past six months, Europe has shown signs of recovering from a financial crisis, while China has shown signs of entering one. 
E)  A competing firm recorded record profits after shifting its investments from Japanese yen to Canadian dollars.

Question 6

Which of the following Bank of Canada actions would be consistent with an expansionary policy?

Accepted Answer

A)  Sell government securities 
B)  Raise the margin requirement 
C)  Buy government securities 
D)  Raise the reserve requirement 
E)  Raise the bank rate 
A)  Sell government securities 
B)  Raise the margin requirement 
C)  Buy government securities 
D)  Raise the reserve requirement 
E)  Raise the bank rate

Question 7

Which of the following is considered part of the M-1 money supply?

Accepted Answer

A)  Stocks in a major auto company 
B)  Bonds 
C)  Certificates of deposit 
D)  Term deposits 
E)  None of these is part of the M-1 money supply. 
A)  Stocks in a major auto company 
B)  Bonds 
C)  Certificates of deposit 
D)  Term deposits 
E)  None of these is part of the M-1 money supply.

Question 8

Jack is one of the bank's most creditworthy customers. The interest rate available to Jack is the

Accepted Answer

A)  reserve requirement rate. 
B)  overnight rate. 
C)  prime rate. 
D)  discount rate. 
E)  rediscount rate. 
A)  reserve requirement rate. 
B)  overnight rate. 
C)  prime rate. 
D)  discount rate. 
E)  rediscount rate.

Question 9

Subprime loans have higher interest rates than conventional loans. Subprime loans are designed for borrowers with low credit scores who would not qualify for conventional loans. The borrower pays a higher rate to compensate the lender for the greater risk of a default. Subprime loans typically have adjustable rates, meaning that the interest rate can change over the life of the loan. Borrowers who take out adjustable subprime loans usually try to keep the rate as low as possible at the start of the loan, even when doing so would lead to higher payments over the entire life of the loan. After a large number of people defaulted on their subprime loans, research revealed that the majority of people who took out subprime loans could have qualified for conventional loans. The statements above most strongly suggest that if all subprime loan borrowers had taken out the loan that was most appropriate for their needs, then what would have been the outcome?

Accepted Answer

A)  None of them would have taken out an adjustable loan. 
B)  None of them would have taken out a subprime loan. 
C)  Most of them would have paid less in interest. 
D)  Most of them would have taken out a conventional loan to cover any expenses not covered by a subprime loan. 
E)  Most of them would have paid money at the start of the loan in order to get a reduced interest rate over the life of the loan. 
A)  None of them would have taken out an adjustable loan. 
B)  None of them would have taken out a subprime loan. 
C)  Most of them would have paid less in interest. 
D)  Most of them would have taken out a conventional loan to cover any expenses not covered by a subprime loan. 
E)  Most of them would have paid money at the start of the loan in order to get a reduced interest rate over the life of the loan.

Question 10

As of January 2015, the value of M-1 was

Accepted Answer

A)  $38.5 million. 
B)  $987 million. 
C)  $730.3 billion. 
D)  $975.2 billion. 
E)  $1.6 trillion. 
A)  $38.5 million. 
B)  $987 million. 
C)  $730.3 billion. 
D)  $975.2 billion. 
E)  $1.6 trillion.

Question 11

Which of the following is contained in the M-1 measurement of the money supply?

Accepted Answer

A)  The number of new automobiles produced in the nation 
B)  Currency and demand deposits 
C)  Credit card cash advances 
D)  The number of new homes started in the month 
E)  Time deposits 
A)  The number of new automobiles produced in the nation 
B)  Currency and demand deposits 
C)  Credit card cash advances 
D)  The number of new homes started in the month 
E)  Time deposits

Question 12

If the Bank of Canada wanted to stimulate business activity, it could ________, but if it wanted to slow down business activity it could ________.

Accepted Answer

A)  sell government securities; raise the reserve requirement 
B)  raise the margin requirement; raise the reserve requirement 
C)  buy government securities; sell government securities 
D)  sell government securities; buy government securities 
E)  raise the bank rate; lower the bank rate 
A)  sell government securities; raise the reserve requirement 
B)  raise the margin requirement; raise the reserve requirement 
C)  buy government securities; sell government securities 
D)  sell government securities; buy government securities 
E)  raise the bank rate; lower the bank rate

Question 13

Banks expand the money supply by

Accepted Answer

A)  opening new chequing accounts. 
B)  earning higher profits. 
C)  paying interest on accounts. 
D)  printing money. 
E)  taking in deposits and lending money. 
A)  opening new chequing accounts. 
B)  earning higher profits. 
C)  paying interest on accounts. 
D)  printing money. 
E)  taking in deposits and lending money.

Question 14

The divisibility characteristic of money is illustrated by a financial company's ability to divide its monetary assets among several investments.

Accepted Answer

A) True 
 B)False

Question 15

An alternative bank that safeguards funds and estates in its care is called a(n)

Accepted Answer

A)  trustee. 
B)  credit union. 
C)  trust company. 
D)  pension fund. 
E)  Schedule B bank. 
A)  trustee. 
B)  credit union. 
C)  trust company. 
D)  pension fund. 
E)  Schedule B bank.

Question 16

When the value of the Canadian dollar is less than the U.S. dollar

Accepted Answer

A)  Canadian companies are more interested in buying U.S. companies. 
B)  Big Macs are more expensive in Canada than the United States. 
C)  U.S. companies become more interested in buying Canadian companies. 
D)  the overall supply and demand of the Canadian dollar is in equilibrium. 
E)  U.S. companies become less interested in buying Canadian companies. 
A)  Canadian companies are more interested in buying U.S. companies. 
B)  Big Macs are more expensive in Canada than the United States. 
C)  U.S. companies become more interested in buying Canadian companies. 
D)  the overall supply and demand of the Canadian dollar is in equilibrium. 
E)  U.S. companies become less interested in buying Canadian companies.

Question 17

Which of the following is most likely to get an unsecured loan?

Accepted Answer

A)  A retail florist shop with collateral 
B)  A wholesale grocer with a marginal credit history 
C)  A lawyer with collateral 
D)  A large manufacturing firm with an excellent credit rating 
E)  A farmer 
A)  A retail florist shop with collateral 
B)  A wholesale grocer with a marginal credit history 
C)  A lawyer with collateral 
D)  A large manufacturing firm with an excellent credit rating 
E)  A farmer

Question 18

________ are operated by investment companies that bring together pools of assets from many investors.

Accepted Answer

A)  Term deposits 
B)  Demand deposits 
C)  Time deposits 
D)  Money market mutual funds 
E)  Savings deposits 
A)  Term deposits 
B)  Demand deposits 
C)  Time deposits 
D)  Money market mutual funds 
E)  Savings deposits

Question 19

Cynthia is concerned about electronic money because

Accepted Answer

A)  power failures cause information to be lost. 
B)  hackers may break into e-cash systems and steal the money in them. 
C)  there are extensive rules and regulations dealing with e-money. 
D)  electronic money generates an extremely large amount of paper. 
E)  banks will generally not recognize this form of money. 
A)  power failures cause information to be lost. 
B)  hackers may break into e-cash systems and steal the money in them. 
C)  there are extensive rules and regulations dealing with e-money. 
D)  electronic money generates an extremely large amount of paper. 
E)  banks will generally not recognize this form of money.

Question 20

What is the difference between a letter of credit and a banker's acceptance?

Accepted Answer

If a Canadian company wants to purchase

Which of the following is not part of the M-1 money supply?

Currency and money are the same thing.

Money serves as a medium of exchange, which means, for example, that it replaces the need for barter among individuals.

The main purpose of the Bank of Canada is to

Which of the following Bank of Canada actions would be consistent with an expansionary policy?

Which of the following is considered part of the M-1 money supply?

Jack is one of the bank's most creditworthy customers. The interest rate available to Jack is the

As of January 2015, the value of M-1 was

Which of the following is contained in the M-1 measurement of the money supply?

If the Bank of Canada wanted to stimulate business activity, it could , but if it wanted to slow down business activity it could .

Banks expand the money supply by

The divisibility characteristic of money is illustrated by a financial company's ability to divide its monetary assets among several investments.

An alternative bank that safeguards funds and estates in its care is called a(n)

When the value of the Canadian dollar is less than the U.S. dollar

Which of the following is most likely to get an unsecured loan?

________ are operated by investment companies that bring together pools of assets from many investors.

Cynthia is concerned about electronic money because

What is the difference between a letter of credit and a banker's acceptance?

Understanding the Canadian Business System

The Environment of Business

Conducting Business Ethically and Responsibly

Entrepreneurship, Small Business, and New Venture Creation

The Global Context of Business

Managing the Business Enterprise

Organizing the Business Enterprise

Managing Human Resources and Labour Relations

Motivating, Satisfying, and Leading Employees

Operations Management, Productivity, and Quality

Understanding Accounting

Understanding Marketing Principles and Developing Products

Pricing, Promotion, and Distributing Products

Finacial Decisions and Risk Management

Filters

Exam 14: Money and Banking

Which of the following is not part of the M-1 money supply?

Currency and money are the same thing.

Money serves as a medium of exchange, which means, for example, that it replaces the need for barter among individuals.

The main purpose of the Bank of Canada is to

Which of the following Bank of Canada actions would be consistent with an expansionary policy?

Which of the following is considered part of the M-1 money supply?

Jack is one of the bank's most creditworthy customers. The interest rate available to Jack is the

As of January 2015, the value of M-1 was

Which of the following is contained in the M-1 measurement of the money supply?

If the Bank of Canada wanted to stimulate business activity, it could ________, but if it wanted to slow down business activity it could ________.

Banks expand the money supply by

The divisibility characteristic of money is illustrated by a financial company's ability to divide its monetary assets among several investments.

An alternative bank that safeguards funds and estates in its care is called a(n)

When the value of the Canadian dollar is less than the U.S. dollar

Which of the following is most likely to get an unsecured loan?

________ are operated by investment companies that bring together pools of assets from many investors.

Cynthia is concerned about electronic money because

What is the difference between a letter of credit and a banker's acceptance?

Understanding the Canadian Business System

The Environment of Business

Conducting Business Ethically and Responsibly

Entrepreneurship, Small Business, and New Venture Creation

The Global Context of Business

Managing the Business Enterprise

Organizing the Business Enterprise

Managing Human Resources and Labour Relations

Motivating, Satisfying, and Leading Employees

Operations Management, Productivity, and Quality

Understanding Accounting

Understanding Marketing Principles and Developing Products

Pricing, Promotion, and Distributing Products

Finacial Decisions and Risk Management

Filters

If the Bank of Canada wanted to stimulate business activity, it could , but if it wanted to slow down business activity it could .