Question 1

What is the spread?

Accepted Answer

A) The difference between a bank's actual reserves and its target reserves. 
B) The interest rate difference between what a bank charges borrowers and what it pays savers. 
C) The difference between a bank's demand deposits and its total loans to customers. 
D) The geographical distribution of banks across the country. 
A) The difference between a bank's actual reserves and its target reserves. 
B) The interest rate difference between what a bank charges borrowers and what it pays savers. 
C) The difference between a bank's demand deposits and its total loans to customers. 
D) The geographical distribution of banks across the country.

Question 2

What is meant by the term "fractional reserve banking"?

Accepted Answer

A) A system whereby banks keep only a fraction of their assets in the form of cash. 
B) A system whereby banks keep only a fraction of their cash with the central bank. 
C) A system whereby banks keep only a fraction of their total deposits in the form of cash. 
D) A system whereby banks must maintain a minimum amount of loans in the form of cash reserves. 
A) A system whereby banks keep only a fraction of their assets in the form of cash. 
B) A system whereby banks keep only a fraction of their cash with the central bank. 
C) A system whereby banks keep only a fraction of their total deposits in the form of cash. 
D) A system whereby banks must maintain a minimum amount of loans in the form of cash reserves.

Question 3

Suppose that Bank Apollo has a target reserve ratio of 5 percent,$10,000 in demand deposits,and $1,000 in reserves.Assume that the bank makes a loan equal to its excess reserves and the borrower spends this amount at a business that does not use Bank Apollo.What is the net effect on Bank Apollo?

Accepted Answer

A) It will be neither under- or over-reserved. 
B) It will be over-reserved by $500. 
C) It will be under-reserved by $500. 
D) It will be under-reserved by $25. 
E) Its reserve status is unaffected. 
A) It will be neither under- or over-reserved. 
B) It will be over-reserved by $500. 
C) It will be under-reserved by $500. 
D) It will be under-reserved by $25. 
E) Its reserve status is unaffected.

Question 4

What is the difference between M1 and M2?

Accepted Answer

A) M1 includes currency in circulation and M2 does not. 
B) M2 includes certificates of deposit and M1 does not. 
C) M2 includes notice deposits and personal term deposits and M1 does not. 
D) M2 is always smaller than M1. 
A) M1 includes currency in circulation and M2 does not. 
B) M2 includes certificates of deposit and M1 does not. 
C) M2 includes notice deposits and personal term deposits and M1 does not. 
D) M2 is always smaller than M1.

Question 5

What is the definition of M1?

Accepted Answer

A) Currency in circulation only. 
B) Currency in circulation plus demand deposits and savings accounts. 
C) Currency in circulation plus demand deposits and Canada Savings Bonds. 
D) Currency in circulation plus demand deposits. 
A) Currency in circulation only. 
B) Currency in circulation plus demand deposits and savings accounts. 
C) Currency in circulation plus demand deposits and Canada Savings Bonds. 
D) Currency in circulation plus demand deposits.

Question 6

Why are demand deposits (chequing accounts)classified as money?

Accepted Answer

A) Because they can be readily used in making purchases and for the payment of debts. 
B) Because they earn interest income for the depositor. 
C) Because they are ultimately the obligations of the government. 
D) Because banks hold currency equal to the value of their outstanding deposits. 
E) Because they are insured by the Canadian Deposit Insurance Company. 
A) Because they can be readily used in making purchases and for the payment of debts. 
B) Because they earn interest income for the depositor. 
C) Because they are ultimately the obligations of the government. 
D) Because banks hold currency equal to the value of their outstanding deposits. 
E) Because they are insured by the Canadian Deposit Insurance Company.

Question 7

Canada's largest commercial bank is the Bank of Canada.

Accepted Answer

A) True 
 B)False

Question 8

If John and Todd both have chequing accounts in the same commercial bank and John writes a cheque for $5,000 payable to Todd,what will happen to the bank's accounts?

Accepted Answer

A) They will not be affected. 
B) Assets and liabilities will both decrease by $5,000. 
C) Liabilities will decrease by $1,000,and the bank's equity will increase by $5,000. 
D) Reserves and demand deposits will both decrease by $5,000. 
E) Demand deposits will increase by $5000 and loans to customers will decrease by $5,000. 
A) They will not be affected. 
B) Assets and liabilities will both decrease by $5,000. 
C) Liabilities will decrease by $1,000,and the bank's equity will increase by $5,000. 
D) Reserves and demand deposits will both decrease by $5,000. 
E) Demand deposits will increase by $5000 and loans to customers will decrease by $5,000.

Question 9

What gives the Canadian dollar its value?

Accepted Answer

One can think of Canadian currency as "c

Question 10

The following is the balance sheet of the Regina Bank.(All figures are in $millions)
  
-Refer to the information above to answer this question.If this bank has excess reserves of $4 then what must be the target reserve ratio?

Accepted Answer

A) 9%. 
B) 18%. 
C) 7%. 
D) 10%. 
E) 20%. 
A) 9%. 
B) 18%. 
C) 7%. 
D) 10%. 
E) 20%.

Question 11

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.What are the excess reserves of this commercial bank?

Accepted Answer

A) $0. 
B) $60,000. 
C) $43,200. 
D) $4,800. 
E) $52,000. 
A) $0. 
B) $60,000. 
C) $43,200. 
D) $4,800. 
E) $52,000.

Question 12

Which of the following was a problem with using gold instead of paper money?

Accepted Answer

A) Gold wasn't as scarce. 
B) Gold wasn't as accepted. 
C) Gold wasn't a commodity. 
D) Gold wasn't as portable. 
E) Gold wasn't as durable. 
A) Gold wasn't as scarce. 
B) Gold wasn't as accepted. 
C) Gold wasn't a commodity. 
D) Gold wasn't as portable. 
E) Gold wasn't as durable.

Question 13

List the six characteristics of money?

Accepted Answer

The six characteristics of mon

Question 14

Suppose that the Lions Bank has excess reserves of $10,000 and demand deposits of $100 000.If the target reserve ratio is 10 percent what is the size of the bank's actual reserves?

Accepted Answer

A) 0. 
B) $4,000. 
C) $10,000. 
D) $20,000. 
E) $110,000. 
A) 0. 
B) $4,000. 
C) $10,000. 
D) $20,000. 
E) $110,000.

Question 15

Distinguish between M1 and M2.

Accepted Answer

Notice deposits and personal t

Question 16

The most important characteristic of money is that it be portable.

Accepted Answer

A) True 
 B)False

Question 17

Assume a commercial bank has demand deposits of $2,000,000 and excess reserves of $50,000.If the target reserve ratio is 10 percent,then what are the bank's actual reserves?

Accepted Answer

A) $150,000. 
B) $200,000. 
C) $250,000. 
D) $50,000. 
E) $500,000. 
A) $150,000. 
B) $200,000. 
C) $250,000. 
D) $50,000. 
E) $500,000.

Question 18

How is money functioning in the case of stock market price quotations?

Accepted Answer

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

Question 19

The following table shows the balance sheet of the Bank of Manitoba.
   By how much is the Bank of Manitoba over- or under- reserved if the target reserve ratio is as follows:
a)2%
b)5%
c)12%
d)20%

Accepted Answer

a)over-reserved by $

Question 20

All of the following,except one,will decrease the size of the multiplier.Which is the exception?

Accepted Answer

A) An increase in the banks' target reserves. 
B) An increase in the amount of cash that people hold. 
C) An insufficient number of creditworthy applicants for loans. 
D) A decrease in interest rates. 
E) A reduced demand for loans by people in times of recession. 
A) An increase in the banks' target reserves. 
B) An increase in the amount of cash that people hold. 
C) An insufficient number of creditworthy applicants for loans. 
D) A decrease in interest rates. 
E) A reduced demand for loans by people in times of recession.

What is the spread?

What is meant by the term "fractional reserve banking"?

Suppose that Bank Apollo has a target reserve ratio of 5 percent,$10,000 in demand deposits,and $1,000 in reserves.Assume that the bank makes a loan equal to its excess reserves and the borrower spends this amount at a business that does not use Bank Apollo.What is the net effect on Bank Apollo?

What is the difference between M1 and M2?

What is the definition of M1?

Why are demand deposits (chequing accounts)classified as money?

Canada's largest commercial bank is the Bank of Canada.

If John and Todd both have chequing accounts in the same commercial bank and John writes a cheque for $5,000 payable to Todd,what will happen to the bank's accounts?

What gives the Canadian dollar its value?

The following is the balance sheet of the Regina Bank.(All figures are in $millions) -Refer to the information above to answer this question.If this bank has excess reserves of $4 then what must be the target reserve ratio?

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.What are the excess reserves of this commercial bank?

Which of the following was a problem with using gold instead of paper money?

List the six characteristics of money?

Suppose that the Lions Bank has excess reserves of $10,000 and demand deposits of $100 000.If the target reserve ratio is 10 percent what is the size of the bank's actual reserves?

Distinguish between M1 and M2.

The most important characteristic of money is that it be portable.

Assume a commercial bank has demand deposits of $2,000,000 and excess reserves of $50,000.If the target reserve ratio is 10 percent,then what are the bank's actual reserves?

How is money functioning in the case of stock market price quotations?

The following table shows the balance sheet of the Bank of Manitoba. By how much is the Bank of Manitoba over- or under- reserved if the target reserve ratio is as follows: a)2% b)5% c)12% d)20%

All of the following,except one,will decrease the size of the multiplier.Which is the exception?

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

What is the spread?

What is meant by the term "fractional reserve banking"?

Suppose that Bank Apollo has a target reserve ratio of 5 percent,$10,000 in demand deposits,and $1,000 in reserves.Assume that the bank makes a loan equal to its excess reserves and the borrower spends this amount at a business that does not use Bank Apollo.What is the net effect on Bank Apollo?

What is the difference between M1 and M2?

What is the definition of M1?

Why are demand deposits (chequing accounts)classified as money?

Canada's largest commercial bank is the Bank of Canada.

If John and Todd both have chequing accounts in the same commercial bank and John writes a cheque for $5,000 payable to Todd,what will happen to the bank's accounts?

What gives the Canadian dollar its value?

The following is the balance sheet of the Regina Bank.(All figures are in $millions) -Refer to the information above to answer this question.If this bank has excess reserves of $4 then what must be the target reserve ratio?

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.What are the excess reserves of this commercial bank?

Which of the following was a problem with using gold instead of paper money?

List the six characteristics of money?

Suppose that the Lions Bank has excess reserves of $10,000 and demand deposits of $100 000.If the target reserve ratio is 10 percent what is the size of the bank's actual reserves?

Distinguish between M1 and M2.

The most important characteristic of money is that it be portable.

Assume a commercial bank has demand deposits of $2,000,000 and excess reserves of $50,000.If the target reserve ratio is 10 percent,then what are the bank's actual reserves?

How is money functioning in the case of stock market price quotations?

The following table shows the balance sheet of the Bank of Manitoba. By how much is the Bank of Manitoba over- or under- reserved if the target reserve ratio is as follows: a)2% b)5% c)12% d)20%

All of the following,except one,will decrease the size of the multiplier.Which is the exception?

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