Question 1

What is a cheque? what are their advantages and disadvantages?

Accepted Answer

A cheque is an instrument used to transf

Question 2

Which of the following is not included in the M2 measure of money but is included in the M3 measure of money?

Accepted Answer

A)  Currency 
B)  Personal deposits 
C)  Demand deposits 
D)  Foreign currency deposits 
A)  Currency 
B)  Personal deposits 
C)  Demand deposits 
D)  Foreign currency deposits

Question 3

E-cash is used for payments ________.

Accepted Answer

A)  that are always secure 
B)  that are very important 
C)  on the internet 
D)  in any transaction 
A)  that are always secure 
B)  that are very important 
C)  on the internet 
D)  in any transaction

Question 4

Weighting monetary components in a simple-sum aggregate index ________.

Accepted Answer

A)  has never been attempted because it is too complex 
B)  might be attempted with rigourous use of microeconomic, aggregation and index number theory 
C)  might not perform as well as the simple-sum index 
D)  might not predict inflation and business cycles better than conventional measures 
A)  has never been attempted because it is too complex 
B)  might be attempted with rigourous use of microeconomic, aggregation and index number theory 
C)  might not perform as well as the simple-sum index 
D)  might not predict inflation and business cycles better than conventional measures

Question 5

A problem with barter exchange when there are many goods is that in a barter system ________.

Accepted Answer

A)  transactions costs are minimized 
B)  there exists a multiple number of prices for each good 
C)  there is only one store of value 
D)  exchange of services is impossible 
A)  transactions costs are minimized 
B)  there exists a multiple number of prices for each good 
C)  there is only one store of value 
D)  exchange of services is impossible

Question 6

In a barter economy the number of prices in an economy with N goods is ________.

Accepted Answer

A)  [N(N - 1)]/2 
B)  N(N/2) 
C)  2N 
D)  N(N/2) - 1 
A)  [N(N - 1)]/2 
B)  N(N/2) 
C)  2N 
D)  N(N/2) - 1

Question 7

Which of the following is not included in M1+ but is included in M1++?

Accepted Answer

A)  Currency outside banks 
B)  Currency held by banks 
C)  Chequable deposits at banks, TMLs and CUCPs 
D)  Nonchequable deposits at banks, TMLs and CUCPs 
A)  Currency outside banks 
B)  Currency held by banks 
C)  Chequable deposits at banks, TMLs and CUCPs 
D)  Nonchequable deposits at banks, TMLs and CUCPs

Question 8

Which of the following statements best explains how the use of money in an economy increases economic efficiency?

Accepted Answer

A)  Money increases economic efficiency because it is costless to produce. 
B)  Money increases economic efficiency because it discourages specialization. 
C)  Money increases economic efficiency because it decreases transactions costs. 
D)  Money cannot have an effect on economic efficiency. 
A)  Money increases economic efficiency because it is costless to produce. 
B)  Money increases economic efficiency because it discourages specialization. 
C)  Money increases economic efficiency because it decreases transactions costs. 
D)  Money cannot have an effect on economic efficiency.

Question 9

Which of the following is a true statement?

Accepted Answer

A)  The conversion of a barter economy to one that uses money increases efficiency by increasing the cost of exchange. 
B)  The conversion of a barter economy to one that uses money increases efficiency by increasing the cost to those who wish to specialize. 
C)  The conversion of a barter economy to one that uses money increases efficiency by reducing transactions costs. 
D)  The conversion of a barter economy to one that uses money does not increases efficiency. 
A)  The conversion of a barter economy to one that uses money increases efficiency by increasing the cost of exchange. 
B)  The conversion of a barter economy to one that uses money increases efficiency by increasing the cost to those who wish to specialize. 
C)  The conversion of a barter economy to one that uses money increases efficiency by reducing transactions costs. 
D)  The conversion of a barter economy to one that uses money does not increases efficiency.

Question 10

Which of the following statements uses the economists' definition of money?

Accepted Answer

A)  I plan to earn a lot of money over the summer. 
B)  Betsy is rich-she has a lot of money. 
C)  I hope that I have enough money to buy my lunch today. 
D)  The job with New Company gave me the opportunity to earn more money. 
A)  I plan to earn a lot of money over the summer. 
B)  Betsy is rich-she has a lot of money. 
C)  I hope that I have enough money to buy my lunch today. 
D)  The job with New Company gave me the opportunity to earn more money.

Question 11

Of the following assets, the least liquid is ________.

Accepted Answer

A)  stocks 
B)  bonds 
C)  chequing deposits 
D)  a house 
A)  stocks 
B)  bonds 
C)  chequing deposits 
D)  a house

Question 12

Paper currency that has been declared legal tender but is not convertible into coins or precious metals is called ________ money.

Accepted Answer

A)  commodity 
B)  fiat 
C)  electronic 
D)  funny 
A)  commodity 
B)  fiat 
C)  electronic 
D)  funny

Question 13

The measures of money supply used by the Bank of Canada are ________ indices.

Accepted Answer

A)  simple-sum 
B)  complex 
C)  multiplicative 
D)  accurate 
A)  simple-sum 
B)  complex 
C)  multiplicative 
D)  accurate

Question 14

What factors have slowed down the movement to a system where all payments are made electronically?

Accepted Answer

The equipment necessary to set up the sy

Question 15

________ are the time and resources spent trying to exchange goods and services.

Accepted Answer

A)  Bargaining costs 
B)  Transaction costs 
C)  Contracting costs 
D)  Barter costs 
A)  Bargaining costs 
B)  Transaction costs 
C)  Contracting costs 
D)  Barter costs

Question 16

Which of the following is not included in the monetary aggregate M2?

Accepted Answer

A)  Currency 
B)  Money market mutual funds 
C)  Personal deposits 
D)  Notice deposits 
A)  Currency 
B)  Money market mutual funds 
C)  Personal deposits 
D)  Notice deposits

Question 17

Which of the following sequences accurately describes the evolution of the payments system?

Accepted Answer

A)  Barter, coins made of precious metals, paper currency, cheques, electronic funds transfers 
B)  Barter, coins made of precious metals, cheques, paper currency, electronic funds transfers 
C)  Barter, cheques, paper currency, coins made of precious metals, electronic funds transfers 
D)  Barter, cheques, paper currency, electronic funds transfers 
A)  Barter, coins made of precious metals, paper currency, cheques, electronic funds transfers 
B)  Barter, coins made of precious metals, cheques, paper currency, electronic funds transfers 
C)  Barter, cheques, paper currency, coins made of precious metals, electronic funds transfers 
D)  Barter, cheques, paper currency, electronic funds transfers

Question 18

Money ________ transaction costs, allowing people to specialize in what they do best.

Accepted Answer

A)  reduces 
B)  increases 
C)  enhances 
D)  eliminates 
A)  reduces 
B)  increases 
C)  enhances 
D)  eliminates

Question 19

People hold money even during inflationary episodes when other assets prove to be better stores of value. This can be explained by the fact that money is all of the following except ________.

Accepted Answer

A)  perfectly liquid 
B)  a unique good for which there are no substitutes 
C)  the only thing accepted in economic exchange 
D)  backed by gold 
A)  perfectly liquid 
B)  a unique good for which there are no substitutes 
C)  the only thing accepted in economic exchange 
D)  backed by gold

Question 20

________ is the relative ease and speed with which an asset can be converted into a medium of exchange.

Accepted Answer

A)  Efficiency 
B)  Liquidity 
C)  Deflation 
D)  Specialization 
A)  Efficiency 
B)  Liquidity 
C)  Deflation 
D)  Specialization

Exam 3: What Is Money

What is a cheque? what are their advantages and disadvantages?

Which of the following is not included in the M2 measure of money but is included in the M3 measure of money?

E-cash is used for payments ________.

Weighting monetary components in a simple-sum aggregate index ________.

A problem with barter exchange when there are many goods is that in a barter system ________.

In a barter economy the number of prices in an economy with N goods is ________.

Which of the following is not included in M1+ but is included in M1++?

Which of the following statements best explains how the use of money in an economy increases economic efficiency?

Which of the following is a true statement?

Which of the following statements uses the economists' definition of money?

Of the following assets, the least liquid is ________.

Paper currency that has been declared legal tender but is not convertible into coins or precious metals is called ________ money.

The measures of money supply used by the Bank of Canada are ________ indices.

What factors have slowed down the movement to a system where all payments are made electronically?

________ are the time and resources spent trying to exchange goods and services.

Which of the following is not included in the monetary aggregate M2?

Which of the following sequences accurately describes the evolution of the payments system?

Money ________ transaction costs, allowing people to specialize in what they do best.

People hold money even during inflationary episodes when other assets prove to be better stores of value. This can be explained by the fact that money is all of the following except ________.

________ is the relative ease and speed with which an asset can be converted into a medium of exchange.

Why Study Money, Banking, and Financial Markets

An Overview of the Financial System

The Meaning of Interest Rates

The Behaviour of Interest Rates

The Risk and Term Structure of Interest Rates

The Stock Market, the Theory of Rational Expectations, and the Efficient Market Hypothesis

An Economic Analysis of Financial Structure

Economic Analysis of Financial Regulation

Banking Industry: Structure and Competition

Financial Crises

Banking and the Management of Financial Institutions

Risk Management With Financial Derivatives

Central Banks and the Bank of Canada

The Money Supply Process

Tools of Monetary Policy

The Conduct of Monetary Policy: Strategy and Tactics

The Foreign Exchange Market

The International Financial System

Quantity Theory, Inflation, and the Demand for Money

The Is Curve

The Monetary Policy and Aggregate Demand Curves

Aggregate Demand and Supply Analysis

Monetary Policy Theory

The Role of Expectations in Monetary Policy

Transmission Mechanisms of Monetary Policy

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