Question 1

How is money functioning in the example of a $1,000 price tag on a used car at a car lot?

Accepted Answer

A) As a unit of account. 
B) As a store of wealth. 
C) As a medium of exchange. 
D) A medium of exchange,a store of wealth,and a unit of account. 
A) As a unit of account. 
B) As a store of wealth. 
C) As a medium of exchange. 
D) A medium of exchange,a store of wealth,and a unit of account.

Question 2

The currency held by banks is considered to be part of what definition of money?

Accepted Answer

A) M1. 
B) M2. 
C) M3. 
D) Part of all three-M1,M2,and M3. 
E) Not part of any definition of money. 
A) M1. 
B) M2. 
C) M3. 
D) Part of all three-M1,M2,and M3. 
E) Not part of any definition of money.

Question 3

Assume that a commercial bank has no excess reserves initially and $20,000 cash is deposited in the bank.If the target reserve ratio is 20 percent,what is the maximum by which the bank can now increase its loans?

Accepted Answer

A) $4,000. 
B) $20,000. 
C) $100,000. 
D) $16,000. 
E) $80,000. 
A) $4,000. 
B) $20,000. 
C) $100,000. 
D) $16,000. 
E) $80,000.

Question 4

What is fractional reserve banking?

Accepted Answer

Fractional reserve banking is a banking

Question 5

What are the coins and paper money held by the Bank of Canada considered to be?

Accepted Answer

A) Part of the M1 definition of the money supply. 
B) Part of the M2 definition of the money supply. 
C) Part of the M3 definition of the money supply. 
D) Part of the M2+ definition of the money supply. 
E) Not part of any definition of the money supply. 
A) Part of the M1 definition of the money supply. 
B) Part of the M2 definition of the money supply. 
C) Part of the M3 definition of the money supply. 
D) Part of the M2+ definition of the money supply. 
E) Not part of any definition of the money supply.

Question 6

Which of the following describes the fundamental identity found in all balance sheets?

Accepted Answer

A) Equity plus Assets equal Liabilities. 
B) Assets plus Liabilities equal Equity. 
C) Assets equal Liabilities plus Equity. 
D) Assets plus Reserves equal Equity. 
E) Reserves plus Liabilities equals Assets plus Equity. 
A) Equity plus Assets equal Liabilities. 
B) Assets plus Liabilities equal Equity. 
C) Assets equal Liabilities plus Equity. 
D) Assets plus Reserves equal Equity. 
E) Reserves plus Liabilities equals Assets plus Equity.

Question 7

How is security provided to depositors in the modern banking system?

Accepted Answer

A) By the target reserve requirement. 
B) By the fractional reserve system. 
C) By the gold standard. 
D) By deposit insurance. 
A) By the target reserve requirement. 
B) By the fractional reserve system. 
C) By the gold standard. 
D) By deposit insurance.

Question 8

Below is a list of financial assets:
1.Certificates of deposit
2.Notice deposits (savings accounts)
3.Currency (coins and paper money)
4.Demand deposits (chequing accounts)
5.Government securities
6.Gold certificates
-Refer to the information above to answer this question.Which item(s)is included in the M2 definition of money?

Accepted Answer

A) Items 1,2,3 and 4. 
B) Items 3,4 and 6. 
C) Items 2,3 and 4. 
D) Items 2,3,4 and 6. 
E) Items 3,4,and 5. 
A) Items 1,2,3 and 4. 
B) Items 3,4 and 6. 
C) Items 2,3 and 4. 
D) Items 2,3,4 and 6. 
E) Items 3,4,and 5.

Question 9

In what way are the value of money and the price level related?

Accepted Answer

A) They are inversely related. 
B) They vary directly during recessions,but inversely during inflation. 
C) They vary directly and proportionately. 
D) They vary directly,but not proportionately. 
E) They are not related in any way. 
A) They are inversely related. 
B) They vary directly during recessions,but inversely during inflation. 
C) They vary directly and proportionately. 
D) They vary directly,but not proportionately. 
E) They are not related in any way.

Question 10

M1 is defined as currency in circulation plus notice deposits in commercial banks.

Accepted Answer

A) True 
 B)False

Question 11

The spread is the difference between the interest rate that a bank pays to borrowers and the interest rate it charges depositors.

Accepted Answer

A) True 
 B)False

Question 12

How does one calculate the amount of bank's actual reserves?

Accepted Answer

A) Add its target and excess reserves. 
B) Subtract its target reserves from its excess reserves. 
C) Multiply its excess reserves by the reserve ratio. 
D) Multiply its demand deposits by the reserve ratio. 
E) Subtract its excess reserves from its target reserves. 
A) Add its target and excess reserves. 
B) Subtract its target reserves from its excess reserves. 
C) Multiply its excess reserves by the reserve ratio. 
D) Multiply its demand deposits by the reserve ratio. 
E) Subtract its excess reserves from its target reserves.

Question 13

Approximately what percentage of the M2 money supply does M1 money supply constitute in 2016?

Accepted Answer

A) 5% of the M2 
B) 24% of the M2 
C) 40% of the M2 
D) 63% of the M2 
E) 80% of the M2 
A) 5% of the M2 
B) 24% of the M2 
C) 40% of the M2 
D) 63% of the M2 
E) 80% of the M2

Question 14

Assume the Trusty Bank's balance sheet is as follows:
  
-Refer to the information above to answer this question.If the bank had $2500 in excess reserves what would be its target reserve ratio?

Accepted Answer

A) 5%. 
B) 7.5%. 
C) 8%. 
D) 12.5%. 
E) 15%. 
A) 5%. 
B) 7.5%. 
C) 8%. 
D) 12.5%. 
E) 15%.

Question 15

List five types of money used throughout history.

Accepted Answer

The five types of money used t

Question 16

What are the three functions of money?

Accepted Answer

First,money acts as a medium of exchange

Question 17

What is the primary aspect of money?

Accepted Answer

A) It is widely acceptable. 
B) It is backed by gold reserves at the Bank of Canada. 
C) It is decreed by parliament as legal tender. 
D) It is guaranteed by the banking system. 
E) It is insured under the Canadian Deposit Insurance Act. 
A) It is widely acceptable. 
B) It is backed by gold reserves at the Bank of Canada. 
C) It is decreed by parliament as legal tender. 
D) It is guaranteed by the banking system. 
E) It is insured under the Canadian Deposit Insurance Act.

Question 18

Debasing the coinage has which of the following effects?

Accepted Answer

A) It causes the price level to drop. 
B) It increases the purchasing power of each coin. 
C) It represents a loss to the person issuing the coins. 
D) It causes inflation. 
A) It causes the price level to drop. 
B) It increases the purchasing power of each coin. 
C) It represents a loss to the person issuing the coins. 
D) It causes inflation.

Question 19

Approximately what percentage of the Canadian M1 money supply does currency in circulation (paper money plus coins)constitute in 2016?

Accepted Answer

A) 5% of the M1 
B) 18% of the M1 
C) 23% of the M1 
D) 50% of the M1 
E) 78% of the M1 
A) 5% of the M1 
B) 18% of the M1 
C) 23% of the M1 
D) 50% of the M1 
E) 78% of the M1

Question 20

The bank rate is the rate of interest that the Bank of Canada charges a commercial bank for a loan.

Accepted Answer

A) True 
 B)False

How is money functioning in the example of a $1,000 price tag on a used car at a car lot?

The currency held by banks is considered to be part of what definition of money?

Assume that a commercial bank has no excess reserves initially and $20,000 cash is deposited in the bank.If the target reserve ratio is 20 percent,what is the maximum by which the bank can now increase its loans?

What is fractional reserve banking?

What are the coins and paper money held by the Bank of Canada considered to be?

Which of the following describes the fundamental identity found in all balance sheets?

How is security provided to depositors in the modern banking system?

In what way are the value of money and the price level related?

M1 is defined as currency in circulation plus notice deposits in commercial banks.

The spread is the difference between the interest rate that a bank pays to borrowers and the interest rate it charges depositors.

How does one calculate the amount of bank's actual reserves?

Approximately what percentage of the M2 money supply does M1 money supply constitute in 2016?

Assume the Trusty Bank's balance sheet is as follows: -Refer to the information above to answer this question.If the bank had $2500 in excess reserves what would be its target reserve ratio?

List five types of money used throughout history.

What are the three functions of money?

What is the primary aspect of money?

Debasing the coinage has which of the following effects?

Approximately what percentage of the Canadian M1 money supply does currency in circulation (paper money plus coins)constitute in 2016?

The bank rate is the rate of interest that the Bank of Canada charges a commercial bank for a loan.

The Economic Problem

Demand and Supply: an Introduction

Measuring the Economy 1: GDP and Economic Growth

Measuring the Economy 2: Unemployment and Inflation

Aggregate Demand and Supply

Aggregate Expenditures

Fiscal Policy

The Money Market and Monetary Policy

International Trade

Exchange Rates and the Balance of Payments

Macroeconomic Policy Revisited

A Walk Through the Twentieth Century and Beyond

Filters

Exam 8: Money and Banking

How is money functioning in the example of a $1,000 price tag on a used car at a car lot?

The currency held by banks is considered to be part of what definition of money?

Assume that a commercial bank has no excess reserves initially and $20,000 cash is deposited in the bank.If the target reserve ratio is 20 percent,what is the maximum by which the bank can now increase its loans?

What is fractional reserve banking?

What are the coins and paper money held by the Bank of Canada considered to be?

Which of the following describes the fundamental identity found in all balance sheets?

How is security provided to depositors in the modern banking system?

In what way are the value of money and the price level related?

M1 is defined as currency in circulation plus notice deposits in commercial banks.

The spread is the difference between the interest rate that a bank pays to borrowers and the interest rate it charges depositors.

How does one calculate the amount of bank's actual reserves?

Approximately what percentage of the M2 money supply does M1 money supply constitute in 2016?

Assume the Trusty Bank's balance sheet is as follows: -Refer to the information above to answer this question.If the bank had $2500 in excess reserves what would be its target reserve ratio?

List five types of money used throughout history.

What are the three functions of money?

What is the primary aspect of money?

Debasing the coinage has which of the following effects?

Approximately what percentage of the Canadian M1 money supply does currency in circulation (paper money plus coins)constitute in 2016?

The bank rate is the rate of interest that the Bank of Canada charges a commercial bank for a loan.

The Economic Problem

Demand and Supply: an Introduction

Measuring the Economy 1: GDP and Economic Growth

Measuring the Economy 2: Unemployment and Inflation

Aggregate Demand and Supply

Aggregate Expenditures

Fiscal Policy

The Money Market and Monetary Policy

International Trade

Exchange Rates and the Balance of Payments

Macroeconomic Policy Revisited

A Walk Through the Twentieth Century and Beyond

Filters