Question 1

Equilibrium in the credit card market

Accepted Answer

A)  determines the demand for money. 
B)  raises the real interest rate. 
C)  is equal to nominal income earned during the day. 
D)  occurs if the marginal benefit exceeds the marginal cost of credit card balances. 
E)  results in a larger volume of real transactions. 
A)  determines the demand for money. 
B)  raises the real interest rate. 
C)  is equal to nominal income earned during the day. 
D)  occurs if the marginal benefit exceeds the marginal cost of credit card balances. 
E)  results in a larger volume of real transactions. A

Question 2

Unconventional monetary policy includes

Accepted Answer

A)  tax incentives and interest rate increases. 
B)  money growth targeting and tariffs. 
C)  negative nominal interest rates and quantitative easing. 
D)  abolishing the central bank. 
E)  money growth targeting. 
A)  tax incentives and interest rate increases. 
B)  money growth targeting and tariffs. 
C)  negative nominal interest rates and quantitative easing. 
D)  abolishing the central bank. 
E)  money growth targeting. C

Question 3

The most narrowly defined monetary aggregate is

Accepted Answer

A)  currency outside banks. 
B)  M1. 
C)  M2. 
D)  L. 
E)  M2++. 
A)  currency outside banks. 
B)  M1. 
C)  M2. 
D)  L. 
E)  M2++. A

Question 4

To increase the nominal money supply, the Bank of Canada can engage in

Accepted Answer

A)  reducing inflation. 
B)  increasing taxes. 
C)  open market purchases. 
D)  open market sales. 
E)  seigniorage. 
A)  reducing inflation. 
B)  increasing taxes. 
C)  open market purchases. 
D)  open market sales. 
E)  seigniorage.

Question 5

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 6

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 7

The quantity of money in circulation is governed by

Accepted Answer

A)  the federal government. 
B)  provincial governments. 
C)  individual consumers. 
D)  the central bank. 
E)  chartered banks. 
A)  the federal government. 
B)  provincial governments. 
C)  individual consumers. 
D)  the central bank. 
E)  chartered banks.

Question 8

Fiat money is

Accepted Answer

A)  commodity money. 
B)  commodity-based paper money. 
C)  Canadian currency in Canada. 
D)  currency found in Europe. 
E)  money in chartered banks. 
A)  commodity money. 
B)  commodity-based paper money. 
C)  Canadian currency in Canada. 
D)  currency found in Europe. 
E)  money in chartered banks.

Question 9

The two most common types of money in circulation in Canada today consist of

Accepted Answer

A)  private bank notes and commodity-backed paper currency. 
B)  commodity-backed paper currency and fiat money. 
C)  fiat money and transaction deposits at banks. 
D)  transaction deposits at banks and commodity money. 
E)  private bank notes and commodity money. 
A)  private bank notes and commodity-backed paper currency. 
B)  commodity-backed paper currency and fiat money. 
C)  fiat money and transaction deposits at banks. 
D)  transaction deposits at banks and commodity money. 
E)  private bank notes and commodity money.

Question 10

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 11

In formulating its monetary policy, the Bank of Canada focuses primarily on?

Accepted Answer

A)  M2 
B)  M1++ and M2++ 
C)  M1 
D)  M1 and M2 
E)  high-powered money 
A)  M2 
B)  M1++ and M2++ 
C)  M1 
D)  M1 and M2 
E)  high-powered money

Question 12

Barter, the exchange of goods for goods, relates to

Accepted Answer

A)  money as a store of value. 
B)  the role of the monetary base. 
C)  a single coincidence of wants. 
D)  a double coincidence of wants. 
E)  the role of money as a medium of exchange. 
A)  money as a store of value. 
B)  the role of the monetary base. 
C)  a single coincidence of wants. 
D)  a double coincidence of wants. 
E)  the role of money as a medium of exchange.

Question 13

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 14

An open market purchase

Accepted Answer

A)  is a purchase by the government of goods and services. 
B)  is a purchase of money by the central bank. 
C)  is a purchase of government bonds by the central bank. 
D)  is a sale of government bonds by the central bank. 
E)  causes decrease in the money supply. 
A)  is a purchase by the government of goods and services. 
B)  is a purchase of money by the central bank. 
C)  is a purchase of government bonds by the central bank. 
D)  is a sale of government bonds by the central bank. 
E)  causes decrease in the money supply.

Question 15

Unpredictable shocks to the financial system

Accepted Answer

A)  reduce the demand for money. 
B)  increase the demand for money. 
C)  cause consumers and firms to switch to credit cards. 
D)  affect small depositors more so than large depositors. 
E)  result in money neutrality. 
A)  reduce the demand for money. 
B)  increase the demand for money. 
C)  cause consumers and firms to switch to credit cards. 
D)  affect small depositors more so than large depositors. 
E)  result in money neutrality.

Question 16

The inflation tax is

Accepted Answer

A)  a tax on nominal goods. 
B)  the sales tax. 
C)  a tax introduced in the early 1980s to fight inflation. 
D)  the revenue from seigniorage. 
E)  the revenue from open market purchases. 
A)  a tax on nominal goods. 
B)  the sales tax. 
C)  a tax introduced in the early 1980s to fight inflation. 
D)  the revenue from seigniorage. 
E)  the revenue from open market purchases.

Question 17

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 18

The nominal money supply is

Accepted Answer

A)  exogenous. 
B)  horizontal at M. 
C)  horizontal at P*. 
D)  determined by the market for goods. 
E)  determined by equilibrium in the market for credit card balances. 
A)  exogenous. 
B)  horizontal at M. 
C)  horizontal at P*. 
D)  determined by the market for goods. 
E)  determined by equilibrium in the market for credit card balances.

Question 19

In the monetary intertemporal model, changing M

Accepted Answer

A)  has real consequences. 
B)  affects the price level. 
C)  has no impact on prices or inflation. 
D)  is used to create economic growth in the short run. 
E)  affects output directly. 
A)  has real consequences. 
B)  affects the price level. 
C)  has no impact on prices or inflation. 
D)  is used to create economic growth in the short run. 
E)  affects output directly.

Question 20

The monetary base includes

Accepted Answer

A)  currency outside banks only. 
B)  M0 and M1. 
C)  inside money. 
D)  money drawn from credit cards. 
E)  all money available outside of the financial system. 
A)  currency outside banks only. 
B)  M0 and M1. 
C)  inside money. 
D)  money drawn from credit cards. 
E)  all money available outside of the financial system.

Equilibrium in the credit card market

Unconventional monetary policy includes

The most narrowly defined monetary aggregate is

To increase the nominal money supply, the Bank of Canada can engage in

Government printing of money to finance government spending is called

The monetary intertemporal model assumes that

The quantity of money in circulation is governed by

Fiat money is

The two most common types of money in circulation in Canada today consist of

Quantitative easing occurs when the central bank

In formulating its monetary policy, the Bank of Canada focuses primarily on?

Barter, the exchange of goods for goods, relates to

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

An open market purchase

Unpredictable shocks to the financial system

The inflation tax is

A classical dichotomy refers to the fact that

The nominal money supply is

In the monetary intertemporal model, changing M

The monetary base includes

Introduction

Measurement

Business Cycle Measurement

Consumer and Firm Behaviour: 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: A Monetary Intertemporal Model: Money, Banking, Prices, and Monetary Policy

Equilibrium in the credit card market

Unconventional monetary policy includes

The most narrowly defined monetary aggregate is

To increase the nominal money supply, the Bank of Canada can engage in

Government printing of money to finance government spending is called

The monetary intertemporal model assumes that

The quantity of money in circulation is governed by

Fiat money is

The two most common types of money in circulation in Canada today consist of

Quantitative easing occurs when the central bank

In formulating its monetary policy, the Bank of Canada focuses primarily on?

Barter, the exchange of goods for goods, relates to

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

An open market purchase

Unpredictable shocks to the financial system

The inflation tax is

A classical dichotomy refers to the fact that

The nominal money supply is

In the monetary intertemporal model, changing M

The monetary base includes

Introduction

Measurement

Business Cycle Measurement

Consumer and Firm Behaviour: 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