Question 1

All of the following,except one,are examples of a bank's assets.Which is the exception?

Accepted Answer

A) Reserves. 
B) Demand Deposits. 
C) Loans to customers. 
D) Securities. 
E) Fixed assets. 
A) Reserves. 
B) Demand Deposits. 
C) Loans to customers. 
D) Securities. 
E) Fixed assets.

Question 2

What is one of the basic reasons for focusing on the M1 definition of money?

Accepted Answer

A) Only the components of M1 are regarded as liquid. 
B) Statistics Canada is able to gather data for the components of M1,but cannot do so for M2 and M3. 
C) Only the components of M1 can be used as a store of wealth. 
D) Its components all have direct and immediate control over goods and services. 
E) Only the components of M1 are regarded as secure and are able to retain their value. 
A) Only the components of M1 are regarded as liquid. 
B) Statistics Canada is able to gather data for the components of M1,but cannot do so for M2 and M3. 
C) Only the components of M1 can be used as a store of wealth. 
D) Its components all have direct and immediate control over goods and services. 
E) Only the components of M1 are regarded as secure and are able to retain their value.

Question 3

What are bank reserves? What is the reserve ratio?

Accepted Answer

Reserves are currency and depo

Question 4

Suppose that the Just Right Coffee Company negotiates a $100,000 loan from the Blackhawks Bank and takes $40,000 in the form of cash,leaving the remainder in its account.What has happened to the supply of money?

Accepted Answer

A) It has increased by $100,000. 
B) It has decreased by $100,000. 
C) It has increased by $40,000. 
D) It has increased by $60,000. 
E) It has not changed. 
A) It has increased by $100,000. 
B) It has decreased by $100,000. 
C) It has increased by $40,000. 
D) It has increased by $60,000. 
E) It has not changed.

Question 5

Which of the following are assets to a bank?

Accepted Answer

A) Demand deposits,equity,and reserves. 
B) Reserves,loans to customers,and securities. 
C) Reserves,property,and equity. 
D) Equity,property,and demand deposits. 
A) Demand deposits,equity,and reserves. 
B) Reserves,loans to customers,and securities. 
C) Reserves,property,and equity. 
D) Equity,property,and demand deposits.

Question 6

Which function of money is in each of the following cases demonstrating?
(1)You pay $10 for a movie ticket.
(2)You deposit your tax refund check in your saving account.
(3)A restaurant manager sets the prices of meals she serves in dollars.
(4)A restaurant manager places the day's receipts in the safe.
(5)McDonald's announces that a Big-Mac now costs only $1.00.
(6)Bill Gates has a net worth of $50 billion.

Accepted Answer

(1)Medium of exchange.
(2)Stor

Question 7

The money multiplier can be defined as the reciprocal of what?

Accepted Answer

A) The bank's actual reserves. 
B) The MPC. 
C) The bank's excess reserves. 
D) The target reserve ratio. 
E) The bank's demand deposits. 
A) The bank's actual reserves. 
B) The MPC. 
C) The bank's excess reserves. 
D) The target reserve ratio. 
E) The bank's demand deposits.

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.By how much can this bank safely expand its loans?

Accepted Answer

A) $43,200. 
B) $60,000. 
C) $6,000. 
D) $4,800. 
E) $75,000. 
A) $43,200. 
B) $60,000. 
C) $6,000. 
D) $4,800. 
E) $75,000.

Question 9

Explain why a bank would not like to hold excess reserves.

Accepted Answer

Banks are profit-oriented orga

Question 10

Which of the following is the best example of commodity money?

Accepted Answer

A) Gold 
B) Stones 
C) Cheque book money 
D) Government bonds 
E) Cigarettes 
A) Gold 
B) Stones 
C) Cheque book money 
D) Government bonds 
E) Cigarettes

Question 11

Define money.

Accepted Answer

Money is anything that is wide

Question 12

What is the basis of the modern banking system?

Accepted Answer

A) Fractional reserves. 
B) Commodity money. 
C) A medium of exchange. 
D) Gold. 
A) Fractional reserves. 
B) Commodity money. 
C) A medium of exchange. 
D) Gold.

Question 13

The following represents the consolidated balance sheet for a hypothetical banking system.The target reserve ratio is 8 percent.
  
-Refer to the information above to answer this question.Which of the following is true of this banking system?

Accepted Answer

A) It is under-reserved by $4,000. 
B) It is under-reserved by $50,000. 
C) It is over-reserved by $4,000. 
D) It is over-reserved by $50,000. 
E) It is under-reserved by $9,333. 
A) It is under-reserved by $4,000. 
B) It is under-reserved by $50,000. 
C) It is over-reserved by $4,000. 
D) It is over-reserved by $50,000. 
E) It is under-reserved by $9,333.

Question 14

Only one of the following is part of the money supply.Which is it?

Accepted Answer

A) Gold. 
B) Currency in a bank's vault. 
C) Demand deposits. 
D) Available credit on people's credit cards. 
A) Gold. 
B) Currency in a bank's vault. 
C) Demand deposits. 
D) Available credit on people's credit cards.

Question 15

The following is the balance sheet of the Regina Bank.(All figures are in $millions)
  
-Refer to the information above to answer this question.Assume that the target reserve ratio is 5 percent.Suppose that one of the bank's customers writes out a cheque for $4 which clears against this bank.As a result,what will the bank's excess reserves now be?

Accepted Answer

A) $0. 
B) $0.9. 
C) $4. 
D) $4.2. 
E) $8. 
A) $0. 
B) $0.9. 
C) $4. 
D) $4.2. 
E) $8.

Question 16

A bank will try to lend out all of its excess reserves.

Accepted Answer

A) True 
 B)False

Question 17

If at the end of the business day a commercial bank is short of cash reserves,what will it do?

Accepted Answer

A) Borrow cash from the Bank of Canada. 
B) Increase its demand deposits. 
C) Impose notice requirements on future withdrawals. 
D) Borrow cash from the Bank of Canada,Increase its demand deposits,and Impose notice requirements on future withdrawals. 
A) Borrow cash from the Bank of Canada. 
B) Increase its demand deposits. 
C) Impose notice requirements on future withdrawals. 
D) Borrow cash from the Bank of Canada,Increase its demand deposits,and Impose notice requirements on future withdrawals.

Question 18

What ratio does the target reserve ratio refer to?

Accepted Answer

A) The bank's reserves to its liabilities and equity. 
B) The bank's equity to its total assets. 
C) The bank's reserves and securities to its demand deposits. 
D) The bank's reserves to its demand deposits. 
E) The bank's reserves to its total assets. 
A) The bank's reserves to its liabilities and equity. 
B) The bank's equity to its total assets. 
C) The bank's reserves and securities to its demand deposits. 
D) The bank's reserves to its demand deposits. 
E) The bank's reserves to its total assets.

Question 19

If you wrote out a cheque to make a purchase of textbooks,which function of money would you be using?

Accepted Answer

A) A medium of exchange. 
B) A unit of account. 
C) A store of wealth. 
D) The commercial function. 
A) A medium of exchange. 
B) A unit of account. 
C) A store of wealth. 
D) The commercial function.

All of the following,except one,are examples of a bank's assets.Which is the exception?

What is one of the basic reasons for focusing on the M1 definition of money?

What are bank reserves? What is the reserve ratio?

Suppose that the Just Right Coffee Company negotiates a $100,000 loan from the Blackhawks Bank and takes $40,000 in the form of cash,leaving the remainder in its account.What has happened to the supply of money?

Which of the following are assets to a bank?

The money multiplier can be defined as the reciprocal of what?

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.By how much can this bank safely expand its loans?

Explain why a bank would not like to hold excess reserves.

Which of the following is the best example of commodity money?

Define money.

What is the basis of the modern banking system?

The following represents the consolidated balance sheet for a hypothetical banking system.The target reserve ratio is 8 percent. -Refer to the information above to answer this question.Which of the following is true of this banking system?

Only one of the following is part of the money supply.Which is it?

A bank will try to lend out all of its excess reserves.

If at the end of the business day a commercial bank is short of cash reserves,what will it do?

What ratio does the target reserve ratio refer to?

If you wrote out a cheque to make a purchase of textbooks,which function of money would you be using?

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

All of the following,except one,are examples of a bank's assets.Which is the exception?

What is one of the basic reasons for focusing on the M1 definition of money?

What are bank reserves? What is the reserve ratio?

Suppose that the Just Right Coffee Company negotiates a $100,000 loan from the Blackhawks Bank and takes $40,000 in the form of cash,leaving the remainder in its account.What has happened to the supply of money?

Which of the following are assets to a bank?

The money multiplier can be defined as the reciprocal of what?

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.By how much can this bank safely expand its loans?

Explain why a bank would not like to hold excess reserves.

Which of the following is the best example of commodity money?

Define money.

What is the basis of the modern banking system?

The following represents the consolidated balance sheet for a hypothetical banking system.The target reserve ratio is 8 percent. -Refer to the information above to answer this question.Which of the following is true of this banking system?

Only one of the following is part of the money supply.Which is it?

A bank will try to lend out all of its excess reserves.

If at the end of the business day a commercial bank is short of cash reserves,what will it do?

What ratio does the target reserve ratio refer to?

If you wrote out a cheque to make a purchase of textbooks,which function of money would you be using?

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