Question 1

________ are the time and resources spent trying to exchange goods and services.

Accepted Answer

A) Bargaining costs 
B) Transaction costs 
C) Contracting costs 
D) Barter costs 
A) Bargaining costs 
B) Transaction costs 
C) Contracting costs 
D) Barter costs B

Question 2

If peanuts serve as a medium of exchange, a unit of account, and a store of value, then peanuts are ________.

Accepted Answer

A) bank deposits 
B) reserves 
C) money 
D) loanable funds 
A) bank deposits 
B) reserves 
C) money 
D) loanable funds C

Question 3

People hold money even during inflationary episodes when other assets prove to be better stores of value. This can be explained by the fact that money is all of the following except ________.

Accepted Answer

A) perfectly liquid 
B) a unique good for which there are no substitutes 
C) the only thing accepted in economic exchange 
D) backed by gold 
A) perfectly liquid 
B) a unique good for which there are no substitutes 
C) the only thing accepted in economic exchange 
D) backed by gold A

Question 4

The total collection of pieces of property that serve to store value is a person's ________.

Accepted Answer

A) wealth 
B) income 
C) money 
D) credit 
A) wealth 
B) income 
C) money 
D) credit

Question 5

Currency includes ________.

Accepted Answer

A) paper money and coins 
B) paper money, coins, and cheques 
C) paper money and cheques 
D) paper money, coins, cheques, and savings deposits 
A) paper money and coins 
B) paper money, coins, and cheques 
C) paper money and cheques 
D) paper money, coins, cheques, and savings deposits

Question 6

What are electronic payments? how do they reduce transaction costs? by how much?

Accepted Answer

In the past when paying bills you had to

Question 7

________ is a flow of earnings per unit of time.

Accepted Answer

A) Income 
B) Money 
C) Wealth 
D) Currency 
A) Income 
B) Money 
C) Wealth 
D) Currency

Question 8

The conversion of a barter economy to one that uses money ________.

Accepted Answer

A) increases efficiency by reducing the need to exchange goods and services 
B) increases efficiency by reducing the need to specialize 
C) increases efficiency by reducing transactions costs 
D) does not increase economic efficiency 
A) increases efficiency by reducing the need to exchange goods and services 
B) increases efficiency by reducing the need to specialize 
C) increases efficiency by reducing transactions costs 
D) does not increase economic efficiency

Question 9

A person's house is part of her ________.

Accepted Answer

A) money 
B) income 
C) liabilities 
D) wealth 
A) money 
B) income 
C) liabilities 
D) wealth

Question 10

Explain how cigarettes could be called "money" in prisoner-of-war camps of World War II.

Accepted Answer

The cigarettes performed the three funct

Question 11

The evolution of the payments system from barter to precious metals, then to fiat money, then to cheques can best be understood as a consequence of ________.

Accepted Answer

A) government regulations designed to improve the efficiency of the payments system 
B) government regulations designed to promote the safety of the payments system 
C) innovations that reduced the costs of exchanging goods and services 
D) competition among firms to make it easier for customers to purchase their products 
A) government regulations designed to improve the efficiency of the payments system 
B) government regulations designed to promote the safety of the payments system 
C) innovations that reduced the costs of exchanging goods and services 
D) competition among firms to make it easier for customers to purchase their products

Question 12

Currency is defined as ________.

Accepted Answer

A) anything accepted for payment of goods and services 
B) paper money and coins 
C) a unit of account 
D) foreign exchange 
A) anything accepted for payment of goods and services 
B) paper money and coins 
C) a unit of account 
D) foreign exchange

Question 13

Which of the following is not included in the measure of M2?

Accepted Answer

A) Personal deposits 
B) Non-personal demand deposits 
C) Currency 
D) Foreign currency deposits 
A) Personal deposits 
B) Non-personal demand deposits 
C) Currency 
D) Foreign currency deposits

Question 14

Divergent growth rates of monetary aggregates are problematic because ________.

Accepted Answer

A) it means that monetary aggregates are not very accurate 
B) it suggests that monetary policy is ineffective 
C) it means that the effect of monetary policy becomes harder to predict 
D) it suggests that the choice of monetary aggregate by policy makers does not matter 
A) it means that monetary aggregates are not very accurate 
B) it suggests that monetary policy is ineffective 
C) it means that the effect of monetary policy becomes harder to predict 
D) it suggests that the choice of monetary aggregate by policy makers does not matter

Question 15

If an individual moves money from a money market mutual fund to currency, ________.

Accepted Answer

A) M1+ increases and M2+ stays the same 
B) M1+ stays the same and M2+ increases 
C) M1+ stays the same and M2+ stays the same 
D) M1+ increases and M2+ decreases 
A) M1+ increases and M2+ stays the same 
B) M1+ stays the same and M2+ increases 
C) M1+ stays the same and M2+ stays the same 
D) M1+ increases and M2+ decreases

Question 16

Kevin purchasing concert tickets with his debit card is an example of the ________ function of money.

Accepted Answer

A) medium of exchange 
B) unit of account 
C) store of value 
D) specialization 
A) medium of exchange 
B) unit of account 
C) store of value 
D) specialization

Question 17

If an individual redeems a Canada savings bond for currency, ________.

Accepted Answer

A) M1+ stays the same and M2++ decreases 
B) M1+ increases and M2++ increases 
C) M1+ increases and M2++ stays the same 
D) M1+ stays the same and M2++ stays the same 
A) M1+ stays the same and M2++ decreases 
B) M1+ increases and M2++ increases 
C) M1+ increases and M2++ stays the same 
D) M1+ stays the same and M2++ stays the same

Question 18

The currency component of M2 shows that there is ________ in cash in the hands of each person in Canada.

Accepted Answer

A) $150 
B) $15000 
C) $1500 
D) $15 
A) $150 
B) $15000 
C) $1500 
D) $15

Question 19

If an individual redeems a Canada savings bond for currency, ________.

Accepted Answer

A) M1+ stays the same and M2 decreases 
B) M1+ increases and M2 increases 
C) M1+ increases and M2 stays the same 
D) M1+ stays the same and M2 stays the same 
A) M1+ stays the same and M2 decreases 
B) M1+ increases and M2 increases 
C) M1+ increases and M2 stays the same 
D) M1+ stays the same and M2 stays the same

Question 20

Which of the following sequences accurately describes the evolution of the payments system?

Accepted Answer

A) Barter, coins made of precious metals, paper currency, cheques, electronic funds transfers 
B) Barter, coins made of precious metals, cheques, paper currency, electronic funds transfers 
C) Barter, cheques, paper currency, coins made of precious metals, electronic funds transfers 
D) Barter, cheques, paper currency, electronic funds transfers 
A) Barter, coins made of precious metals, paper currency, cheques, electronic funds transfers 
B) Barter, coins made of precious metals, cheques, paper currency, electronic funds transfers 
C) Barter, cheques, paper currency, coins made of precious metals, electronic funds transfers 
D) Barter, cheques, paper currency, electronic funds transfers

Exam 3: What Is Money

________ are the time and resources spent trying to exchange goods and services.

If peanuts serve as a medium of exchange, a unit of account, and a store of value, then peanuts are ________.

People hold money even during inflationary episodes when other assets prove to be better stores of value. This can be explained by the fact that money is all of the following except ________.

The total collection of pieces of property that serve to store value is a person's ________.

Currency includes ________.

What are electronic payments? how do they reduce transaction costs? by how much?

________ is a flow of earnings per unit of time.

The conversion of a barter economy to one that uses money ________.

A person's house is part of her ________.

Explain how cigarettes could be called "money" in prisoner-of-war camps of World War II.

The evolution of the payments system from barter to precious metals, then to fiat money, then to cheques can best be understood as a consequence of ________.

Currency is defined as ________.

Which of the following is not included in the measure of M2?

Divergent growth rates of monetary aggregates are problematic because ________.

If an individual moves money from a money market mutual fund to currency, ________.

Kevin purchasing concert tickets with his debit card is an example of the ________ function of money.

If an individual redeems a Canada savings bond for currency, ________.

The currency component of M2 shows that there is ________ in cash in the hands of each person in Canada.

If an individual redeems a Canada savings bond for currency, ________.

Which of the following sequences accurately describes the evolution of the payments system?

Why Study Money, Banking, and Financial Markets

An Overview of the Financial System

Understanding 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

Financial Crises

Economic Analysis of Financial Regulation

Banking Industry: Structure and Competition

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

Financial Crises in Emerging Markets

The ISLM Model

Non-Bank Finance

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