Question 1

The double coincidence of wants problem is solved by

Accepted Answer

A)  credit markets. 
B)  government intervention. 
C)  the use of money. 
D)  specialization. 
E)  monetary aggregates. 
A)  credit markets. 
B)  government intervention. 
C)  the use of money. 
D)  specialization. 
E)  monetary aggregates.

Question 2

The real interest rate is approximately equal to

Accepted Answer

A)  the growth in real GDP. 
B)  the nominal interest rate. 
C)  the nominal interest rate plus the inflation rate. 
D)  the nominal interest rate minus the inflation rate. 
E)  one divided by the nominal interest rate minus the inflation rate. 
A)  the growth in real GDP. 
B)  the nominal interest rate. 
C)  the nominal interest rate plus the inflation rate. 
D)  the nominal interest rate minus the inflation rate. 
E)  one divided by the nominal interest rate minus the inflation rate.

Question 3

The segmented markets model is best described by:

Accepted Answer

A)  some economic agents participate more frequently in financial markets than others. 
B)  certain markets are unable to communicate price information to each other. 
C)  markets for labour are segmented based on cash balances of workers. 
D)  markets are segmented based on the degree of moral hazard. 
E)  prices adjust for only certain segments of the market. 
A)  some economic agents participate more frequently in financial markets than others. 
B)  certain markets are unable to communicate price information to each other. 
C)  markets for labour are segmented based on cash balances of workers. 
D)  markets are segmented based on the degree of moral hazard. 
E)  prices adjust for only certain segments of the market.

Question 4

If the nominal interest rate is rises,

Accepted Answer

A)  there is substantial inflation in the economy. 
B)  real interest rates are declining. 
C)  the opportunity cost of holding cash rises.. 
D)  consumers and firms are less inclined to use credit cards. 
E)  inflation is declining. 
A)  there is substantial inflation in the economy. 
B)  real interest rates are declining. 
C)  the opportunity cost of holding cash rises.. 
D)  consumers and firms are less inclined to use credit cards. 
E)  inflation is declining.

Question 5

Use of money to save up for a future cash purchase would be an example of money's role as a

Accepted Answer

A)  medium of exchange. 
B)  store of value. 
C)  unit of account. 
D)  store of wealth. 
E)  standard of deferred payment. 
A)  medium of exchange. 
B)  store of value. 
C)  unit of account. 
D)  store of wealth. 
E)  standard of deferred payment.

Question 6

Real money demand is a function of

Accepted Answer

A)  the level of transactions in the economy. 
B)  increasing real income. 
C)  increasing real income and decreasing nominal interest rates. 
D)  increasing real income and decreasing inflation rates. 
E)  increasing real income and increasing inflation rates. 
A)  the level of transactions in the economy. 
B)  increasing real income. 
C)  increasing real income and decreasing nominal interest rates. 
D)  increasing real income and decreasing inflation rates. 
E)  increasing real income and increasing inflation rates.

Question 7

An increase in the perceived instability of banks

Accepted Answer

A)  decreases the demand for money. 
B)  increases the demand for money. 
C)  leads to bank failure. 
D)  increases people's dependence on banks for transactions. 
E)  led to the elimination of reserve requirements in 1992. 
A)  decreases the demand for money. 
B)  increases the demand for money. 
C)  leads to bank failure. 
D)  increases people's dependence on banks for transactions. 
E)  led to the elimination of reserve requirements in 1992.

Question 8

Quantitative easing occurs when the central bank

Accepted Answer

A)  purchases long-term assets. 
B)  purchases short-term assets. 
C)  engages in open market operations. 
D)  performs a helicopter drop. 
E)  increases its interest rate target. 
A)  purchases long-term assets. 
B)  purchases short-term assets. 
C)  engages in open market operations. 
D)  performs a helicopter drop. 
E)  increases its interest rate target.

Question 9

The demand for money is determined by

Accepted Answer

A)  the behaviour of the government. 
B)  the behaviour of the chartered banks. 
C)  the behaviour of the Bank of Canada. 
D)  the behaviour of the consumer and the firm. 
E)  the behaviour of the private sector. 
A)  the behaviour of the government. 
B)  the behaviour of the chartered banks. 
C)  the behaviour of the Bank of Canada. 
D)  the behaviour of the consumer and the firm. 
E)  the behaviour of the private sector.

Question 10

Government printing of money to finance government spending is called

Accepted Answer

A)  irresponsible. 
B)  an open-market purchase. 
C)  sterilization. 
D)  seigniorage. 
E)  an open market sale. 
A)  irresponsible. 
B)  an open-market purchase. 
C)  sterilization. 
D)  seigniorage. 
E)  an open market sale.

Question 11

The most significant problem in trying to empirically measure the real rate of interest is that

Accepted Answer

A)  there are so many different types of bonds. 
B)  expected inflation is unobservable. 
C)  interest rates fluctuate so much from day to day. 
D)  banks infrequently change the prime rate of interest. 
E)  there are so many different nominal interest rates. 
A)  there are so many different types of bonds. 
B)  expected inflation is unobservable. 
C)  interest rates fluctuate so much from day to day. 
D)  banks infrequently change the prime rate of interest. 
E)  there are so many different nominal interest rates.

Question 12

A classical dichotomy refers to the fact that

Accepted Answer

A)  the real variables in the model are determined independently of the money market. 
B)  the real variables are jointly determined depending on what happens in the money market. 
C)  real and nominal variables are often different. 
D)  the real interest rate differs from the nominal interest rate. 
E)  classical theory predicts negative effects of high inflation. 
A)  the real variables in the model are determined independently of the money market. 
B)  the real variables are jointly determined depending on what happens in the money market. 
C)  real and nominal variables are often different. 
D)  the real interest rate differs from the nominal interest rate. 
E)  classical theory predicts negative effects of high inflation.

Question 13

The marginal cost of financial transactions rises with the volume of financial transactions due to

Accepted Answer

A)  congestion. 
B)  power failure. 
C)  perceived instability of banks. 
D)  reserve requirements. 
E)  bank failure. 
A)  congestion. 
B)  power failure. 
C)  perceived instability of banks. 
D)  reserve requirements. 
E)  bank failure.

Question 14

Inflation targeting attempts to keep inflation

Accepted Answer

A)  at zero. 
B)  between 1% and 3%. 
C)  negative. 
D)  between 4% and 6% 
E)  between 0% and 0.5%. 
A)  at zero. 
B)  between 1% and 3%. 
C)  negative. 
D)  between 4% and 6% 
E)  between 0% and 0.5%.

Question 15

The real return on bonds is

Accepted Answer

A)  R. 
B)  the return someone receives from holding a nominal bond from the current to the future period. 
C)  always equal to the nominal return. 
D)  the return someone receives from holding a real bond from the current to the future period. 
E)  always greater than the nominal return. 
A)  R. 
B)  the return someone receives from holding a nominal bond from the current to the future period. 
C)  always equal to the nominal return. 
D)  the return someone receives from holding a real bond from the current to the future period. 
E)  always greater than the nominal return.

Question 16

If an increase in the level of the money supply results in a proportionate increase in prices with no effect on any real variables,we say that

Accepted Answer

A)  the Fisher relationship holds. 
B)  money is neutral. 
C)  money is superneutral. 
D)  money is the most preferred store of value. 
E)  money demand is neutral. 
A)  the Fisher relationship holds. 
B)  money is neutral. 
C)  money is superneutral. 
D)  money is the most preferred store of value. 
E)  money demand is neutral.

Question 17

Money is useful in exchange when

Accepted Answer

A)  credit transactions are difficult. 
B)  inflation is rising. 
C)  there is a single coincidence of wants. 
D)  interest rates are high. 
E)  there are several monetary aggregates. 
A)  credit transactions are difficult. 
B)  inflation is rising. 
C)  there is a single coincidence of wants. 
D)  interest rates are high. 
E)  there are several monetary aggregates.

Question 18

Which of the following is included in M2,but not in M1?

Accepted Answer

A)  currency (outside the Bank of Canada and the vaults of depository institutions) 
B)  travelers' cheques 
C)  demand deposits 
D)  personal savings deposits 
E)  nonpersonal notice deposits 
A)  currency (outside the Bank of Canada and the vaults of depository institutions) 
B)  travelers' cheques 
C)  demand deposits 
D)  personal savings deposits 
E)  nonpersonal notice deposits

Question 19

The monetary intertemporal model assumes that

Accepted Answer

A)  the real interest rate equals the nominal interest rate. 
B)  the federal government makes all the decisions about interest rates. 
C)  all transactions in the credit market are carried out using credit cards. 
D)  after leaving the credit market, consumers do not go to work. 
E)  all credit card balances are paid off at the end of the day. 
A)  the real interest rate equals the nominal interest rate. 
B)  the federal government makes all the decisions about interest rates. 
C)  all transactions in the credit market are carried out using credit cards. 
D)  after leaving the credit market, consumers do not go to work. 
E)  all credit card balances are paid off at the end of the day.

Question 20

Which one of the following is included in M3,but not in M2?

Accepted Answer

A)  Bank of Canada term deposits 
B)  foreign currency deposits of residents of Canada 
C)  Canadian currency held by foreigners 
D)  Eurodollars 
E)  personal term deposits 
A)  Bank of Canada term deposits 
B)  foreign currency deposits of residents of Canada 
C)  Canadian currency held by foreigners 
D)  Eurodollars 
E)  personal term deposits

The double coincidence of wants problem is solved by

The real interest rate is approximately equal to

The segmented markets model is best described by:

If the nominal interest rate is rises,

Use of money to save up for a future cash purchase would be an example of money's role as a

Real money demand is a function of

An increase in the perceived instability of banks

Quantitative easing occurs when the central bank

The demand for money is determined by

Government printing of money to finance government spending is called

The most significant problem in trying to empirically measure the real rate of interest is that

A classical dichotomy refers to the fact that

The marginal cost of financial transactions rises with the volume of financial transactions due to

Inflation targeting attempts to keep inflation

The real return on bonds is

If an increase in the level of the money supply results in a proportionate increase in prices with no effect on any real variables,we say that

Money is useful in exchange when

Which of the following is included in M2,but not in M1?

The monetary intertemporal model assumes that

Which one of the following is included in M3,but not in M2?

Introduction

Measurement

Business Cycle Measurement

Consumer and Firm Behavior: The Work–Leisure Decision and Profit Maximization

A Closed-Economy One-Period Macroeconomic Model

Search and Unemployment

Economic Growth: Malthus and Solow

Income Disparity Among Countries and Endogenous Growth

A Two-Period Model: The Consumption–Savings Decision and Credit Markets

Credit Market Imperfections: Credit Frictions, Financial Crises, and Social Security

A Real Intertemporal Model with Investment

Business Cycle Models with Flexible Prices and Wages

New Keynesian Economics: Sticky Prices

Inflation: Phillips Curves and Neo-Fisherism

International Trade in Goods and Assets

Money in the Open Economy

Money, Inflation, and Banking: A Deeper Look

Filters

Exam 12: Money, Banking, Prices, and Monetary Policy

The double coincidence of wants problem is solved by

The real interest rate is approximately equal to

The segmented markets model is best described by:

If the nominal interest rate is rises,

Use of money to save up for a future cash purchase would be an example of money's role as a

Real money demand is a function of

An increase in the perceived instability of banks

Quantitative easing occurs when the central bank

The demand for money is determined by

Government printing of money to finance government spending is called

The most significant problem in trying to empirically measure the real rate of interest is that

A classical dichotomy refers to the fact that

The marginal cost of financial transactions rises with the volume of financial transactions due to

Inflation targeting attempts to keep inflation

The real return on bonds is

If an increase in the level of the money supply results in a proportionate increase in prices with no effect on any real variables,we say that

Money is useful in exchange when

Which of the following is included in M2,but not in M1?

The monetary intertemporal model assumes that

Which one of the following is included in M3,but not in M2?

Introduction

Measurement

Business Cycle Measurement

Consumer and Firm Behavior: The Work–Leisure Decision and Profit Maximization

A Closed-Economy One-Period Macroeconomic Model

Search and Unemployment

Economic Growth: Malthus and Solow

Income Disparity Among Countries and Endogenous Growth

A Two-Period Model: The Consumption–Savings Decision and Credit Markets

Credit Market Imperfections: Credit Frictions, Financial Crises, and Social Security

A Real Intertemporal Model with Investment

Business Cycle Models with Flexible Prices and Wages

New Keynesian Economics: Sticky Prices

Inflation: Phillips Curves and Neo-Fisherism

International Trade in Goods and Assets

Money in the Open Economy

Money, Inflation, and Banking: A Deeper Look

Filters