Question 1

Which of the following statements about the value of money is correct?

Accepted Answer

A) It varies inversely with the price level. 
B) It varies directly with the interest rate. 
C) It varies directly with the price level. 
D) It varies directly with the quantity of money. 
A) It varies inversely with the price level. 
B) It varies directly with the interest rate. 
C) It varies directly with the price level. 
D) It varies directly with the quantity of money.

Question 2

The following is the balance sheet of the Leafs Bank
  
-Refer to the information above to answer this question.Assume the target reserve ratio is 8 percent.If the bank lends out its excess reserves,and a cheque clears against the bank for this amount,what will be the amount of the bank's excess reserves?

Accepted Answer

A) $0. 
B) $4,800. 
C) $24,000. 
D) $19,200. 
E) $7,000. 
A) $0. 
B) $4,800. 
C) $24,000. 
D) $19,200. 
E) $7,000.

Question 3

Assume that a firm deposits in its bank a cheque for $1,000 drawn on another bank.If the target reserve ratio is 20 percent and excess reserves are initially zero,how much excess reserves does the bank now have?

Accepted Answer

A) $800. 
B) $1,200. 
C) $5,000. 
D) $1,000. 
E) $4,000. 
A) $800. 
B) $1,200. 
C) $5,000. 
D) $1,000. 
E) $4,000.

Question 4

Explain how an increase in the amount of cash that people hold will lead to a smaller money multiplier.

Accepted Answer

An increase in cash holdings will mean t

Question 5

Why are Canadian banks called chartered banks?

Accepted Answer

A) Because they are protected under the Charter of Rights and Freedoms. 
B) Because they receive a charter under the Bank Act. 
C) Because they are run by chartered accountants. 
D) Because they receive a charter to print money. 
E) Because they receive a charter to operate in a specific province. 
A) Because they are protected under the Charter of Rights and Freedoms. 
B) Because they receive a charter under the Bank Act. 
C) Because they are run by chartered accountants. 
D) Because they receive a charter to print money. 
E) Because they receive a charter to operate in a specific province.

Question 6

"Credit cards make a difference in how much money people hold,but they are not money." Explain this statement.

Accepted Answer

The first part of the statement ("credit

Question 7

The following is the balance sheet of the whole banking system (all figures are in $billions):
  
-Refer to the information above to answer this question.Assume that the target reserve ratio is 5 percent.What is the maximum amount by which the commercial banking system can expand the supply of money?

Accepted Answer

A) $40. 
B) $25. 
C) $10. 
D) $2. 
E) $38. 
A) $40. 
B) $25. 
C) $10. 
D) $2. 
E) $38.

Question 8

The following is the balance sheet of the Leafs Bank
  
-Refer to the information above to answer this question.Assume the target reserve ratio is 8 percent.If the original balance sheet was for the commercial banking system rather than a single bank,what is the maximum amount by which loans and deposits can be expanded?

Accepted Answer

A) $4,800. 
B) $19,200. 
C) $240,000. 
D) $60,000. 
E) $35,000. 
A) $4,800. 
B) $19,200. 
C) $240,000. 
D) $60,000. 
E) $35,000.

Question 9

Assume the XYZ Company negotiates a loan for $100,000 from the Trusty Bank and takes out $10,000 in the form of cash,leaving the remainder in its account.What is the result?

Accepted Answer

A) The supply of money has increased by $100,000. 
B) The supply of money has declined by $100,000. 
C) The supply of money has increased by $10,000. 
D) The supply of money has increased by $90,000. 
E) The supply of money has not changed. 
A) The supply of money has increased by $100,000. 
B) The supply of money has declined by $100,000. 
C) The supply of money has increased by $10,000. 
D) The supply of money has increased by $90,000. 
E) The supply of money has not changed.

Question 10

Which of the following is true regarding the purchasing power of the dollar?

Accepted Answer

A) It varies directly with the cost-of-living index. 
B) It has been increasing in recent years because of higher standards of living. 
C) It varies inversely with the level of aggregate demand. 
D) It varies inversely with the price level. 
E) It varies directly with the price level. 
A) It varies directly with the cost-of-living index. 
B) It has been increasing in recent years because of higher standards of living. 
C) It varies inversely with the level of aggregate demand. 
D) It varies inversely with the price level. 
E) It varies directly with the price level.

Question 11

Which of the following statements is correct if a bank is holding excess reserves?

Accepted Answer

A) It is in a position to make additional loans. 
B) Its reserves exceed its loans. 
C) It is making above-normal profits. 
D) Its actual reserves are less than its targeted reserves. 
E) Its loans to customers exceed its required loans. 
A) It is in a position to make additional loans. 
B) Its reserves exceed its loans. 
C) It is making above-normal profits. 
D) Its actual reserves are less than its targeted reserves. 
E) Its loans to customers exceed its required loans.

Question 12

What is the approximate value of the 2016 M2 supply of money in Canada?

Accepted Answer

A) $33 billion. 
B) $96 billion. 
C) $230 billion. 
D) $551 billion. 
E) $1426 billion. 
A) $33 billion. 
B) $96 billion. 
C) $230 billion. 
D) $551 billion. 
E) $1426 billion.

Question 13

Southland Bank has $10,000 in excess reserves and $25,000 in actual reserves,if the target reserve ratio is 20%,what are the values of demand deposit and outstanding loans? Assume that the bank has no other assets or liabilities.

Accepted Answer

Demand deposit is $7

Question 14

What kind of banking system does Canada have?

Accepted Answer

A) A unit banking system. 
B) A branch banking system. 
C) A money banking system. 
D) A provincial banking system. 
A) A unit banking system. 
B) A branch banking system. 
C) A money banking system. 
D) A provincial banking system.

Question 15

The target reserve ratio is that portion of a bank's deposits that it wishes to loan out.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following was created by the huge influx of gold into Europe in the sixteenth and seventeenth centuries?

Accepted Answer

A) Import push inflation 
B) Wage push inflation 
C) Demand pull inflation 
D) Recession 
E) Unemployment 
A) Import push inflation 
B) Wage push inflation 
C) Demand pull inflation 
D) Recession 
E) Unemployment

Question 17

The Canada Deposit Insurance Corporation insures each depositor of each commercial bank in Canada up to what maximum amount?

Accepted Answer

A) $10,000. 
B) $25,000. 
C) $60,000. 
D) $100,000. 
A) $10,000. 
B) $25,000. 
C) $60,000. 
D) $100,000.

Question 18

Assume that Company XYZ deposits $500,000 in cash in the Bank of New Brunswick.If the bank had no excess reserves before the deposit was made and the target reserve ratio is 20 percent,what is the maximum amount of new loans that the bank can now offer?

Accepted Answer

A) $100,000. 
B) $400,000. 
C) $500,000. 
D) $2,000. 
E) $2,500,000. 
A) $100,000. 
B) $400,000. 
C) $500,000. 
D) $2,000. 
E) $2,500,000.

Question 19

Explain why a credit card is not money.

Accepted Answer

Money is defined as anything that is wid

Question 20

Suppose Highland Bank has deposits of $50,000 and target reserves are equal to actual reserves of $10,000.
a)What is Highland Bank's target reserve ratio?
b)Now suppose Highlands target reserve ratio is 25%.Will the bank be over- or under-reserved?

Accepted Answer

a)20%
b)Un

Which of the following statements about the value of money is correct?

Assume that a firm deposits in its bank a cheque for $1,000 drawn on another bank.If the target reserve ratio is 20 percent and excess reserves are initially zero,how much excess reserves does the bank now have?

Explain how an increase in the amount of cash that people hold will lead to a smaller money multiplier.

Why are Canadian banks called chartered banks?

"Credit cards make a difference in how much money people hold,but they are not money." Explain this statement.

The following is the balance sheet of the whole banking system (all figures are in $billions): -Refer to the information above to answer this question.Assume that the target reserve ratio is 5 percent.What is the maximum amount by which the commercial banking system can expand the supply of money?

Assume the XYZ Company negotiates a loan for $100,000 from the Trusty Bank and takes out $10,000 in the form of cash,leaving the remainder in its account.What is the result?

Which of the following is true regarding the purchasing power of the dollar?

Which of the following statements is correct if a bank is holding excess reserves?

What is the approximate value of the 2016 M2 supply of money in Canada?

Southland Bank has $10,000 in excess reserves and $25,000 in actual reserves,if the target reserve ratio is 20%,what are the values of demand deposit and outstanding loans? Assume that the bank has no other assets or liabilities.

What kind of banking system does Canada have?

The target reserve ratio is that portion of a bank's deposits that it wishes to loan out.

Which of the following was created by the huge influx of gold into Europe in the sixteenth and seventeenth centuries?

The Canada Deposit Insurance Corporation insures each depositor of each commercial bank in Canada up to what maximum amount?

Assume that Company XYZ deposits $500,000 in cash in the Bank of New Brunswick.If the bank had no excess reserves before the deposit was made and the target reserve ratio is 20 percent,what is the maximum amount of new loans that the bank can now offer?

Explain why a credit card is not money.

Suppose Highland Bank has deposits of $50,000 and target reserves are equal to actual reserves of $10,000. a)What is Highland Bank's target reserve ratio? b)Now suppose Highlands target reserve ratio is 25%.Will the bank be over- or under-reserved?

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

Which of the following statements about the value of money is correct?

Assume that a firm deposits in its bank a cheque for $1,000 drawn on another bank.If the target reserve ratio is 20 percent and excess reserves are initially zero,how much excess reserves does the bank now have?

Explain how an increase in the amount of cash that people hold will lead to a smaller money multiplier.

Why are Canadian banks called chartered banks?

"Credit cards make a difference in how much money people hold,but they are not money." Explain this statement.

The following is the balance sheet of the whole banking system (all figures are in $billions): -Refer to the information above to answer this question.Assume that the target reserve ratio is 5 percent.What is the maximum amount by which the commercial banking system can expand the supply of money?

Assume the XYZ Company negotiates a loan for $100,000 from the Trusty Bank and takes out $10,000 in the form of cash,leaving the remainder in its account.What is the result?

Which of the following is true regarding the purchasing power of the dollar?

Which of the following statements is correct if a bank is holding excess reserves?

What is the approximate value of the 2016 M2 supply of money in Canada?

Southland Bank has $10,000 in excess reserves and $25,000 in actual reserves,if the target reserve ratio is 20%,what are the values of demand deposit and outstanding loans? Assume that the bank has no other assets or liabilities.

What kind of banking system does Canada have?

The target reserve ratio is that portion of a bank's deposits that it wishes to loan out.

Which of the following was created by the huge influx of gold into Europe in the sixteenth and seventeenth centuries?

The Canada Deposit Insurance Corporation insures each depositor of each commercial bank in Canada up to what maximum amount?

Assume that Company XYZ deposits $500,000 in cash in the Bank of New Brunswick.If the bank had no excess reserves before the deposit was made and the target reserve ratio is 20 percent,what is the maximum amount of new loans that the bank can now offer?

Explain why a credit card is not money.

Suppose Highland Bank has deposits of $50,000 and target reserves are equal to actual reserves of $10,000. a)What is Highland Bank's target reserve ratio? b)Now suppose Highlands target reserve ratio is 25%.Will the bank be over- or under-reserved?

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