Question 1

Why is the barter system less desirable than using money for exchange?

Accepted Answer

A) Gold and silver are risky and inconvenient to transport. 
B) It is a more inefficient and a time-consuming process. 
C) Gold and silver are relatively scarcer than other commodities. 
D) It tends to promote inflation. 
A) Gold and silver are risky and inconvenient to transport. 
B) It is a more inefficient and a time-consuming process. 
C) Gold and silver are relatively scarcer than other commodities. 
D) It tends to promote inflation.

Question 2

Scenario 11-2
A bank's assets consist of $1 000 000 in total reserves, $2 100 000 in loans, and a building worth $1 200 000. Its liabilities and capital consist of $3 000 000 in demand deposits and $1 300 000 in capital.
-Refer to Scenario 11-2.If the bank desires to keep reserves equal to one-third of deposits,what is the level of the bank's excess reserves and how much could it loan out as a result?

Accepted Answer

A) Excess reserves are $700 000, and it could loan out $2 100 000. 
B) Excess reserves are $300 000, and it could loan out $300 000. 
C) Excess reserves are $300 000, and it could loan out $900 000. 
D) Excess reserves are zero, and it could not loan out any money. 
A) Excess reserves are $700 000, and it could loan out $2 100 000. 
B) Excess reserves are $300 000, and it could loan out $300 000. 
C) Excess reserves are $300 000, and it could loan out $900 000. 
D) Excess reserves are zero, and it could not loan out any money.

Question 3

What currency does M2 include?

Accepted Answer

A) currency outside chartered banks plus demand deposits at chartered banks 
B) currency outside chartered banks plus notice deposits at chartered banks 
C) currency outside chartered banks plus demand deposits and notice at chartered banks 
D) currency outside chartered banks 
A) currency outside chartered banks plus demand deposits at chartered banks 
B) currency outside chartered banks plus notice deposits at chartered banks 
C) currency outside chartered banks plus demand deposits and notice at chartered banks 
D) currency outside chartered banks

Question 4

What is the principle role of money?

Accepted Answer

A) to serve as a standard for the Bank of Canada 
B) to serve as a standard for credit transactions 
C) to serve a medium of exchange 
D) to serve as a standard for making bank loans 
A) to serve as a standard for the Bank of Canada 
B) to serve as a standard for credit transactions 
C) to serve a medium of exchange 
D) to serve as a standard for making bank loans

Why is the barter system less desirable than using money for exchange?

What currency does M2 include?

What is the principle role of money?

The Role and Method of Economics

Scarcity, trade-Offs, and Production Possibilities

Supply and Demand

Bringing Supply and Demand Together

Introduction to the Macroeconomy

Measuring Economic Performance

Economic Growth in the Global Economy

Aggregate Demand

Aggregate Supply and Macroeconomic Equilibrium

Fiscal Policy

The Bank of Canada

Monetary Policy

International Trade

International Finance

Filters

Exam 11: Money and the Banking System

Why is the barter system less desirable than using money for exchange?

What currency does M2 include?

What is the principle role of money?

The Role and Method of Economics

Scarcity, trade-Offs, and Production Possibilities

Supply and Demand

Bringing Supply and Demand Together

Introduction to the Macroeconomy

Measuring Economic Performance

Economic Growth in the Global Economy

Aggregate Demand

Aggregate Supply and Macroeconomic Equilibrium

Fiscal Policy

The Bank of Canada

Monetary Policy

International Trade

International Finance

Filters