Question 1

Marc puts prices on surfboards and skateboards at his sporting goods store. He is using money as a unit of account.

Accepted Answer

A) True 
 B)False

Question 2

Which list contains only actions that increase the money supply?

Accepted Answer

A)  lowering the bank rate; raising the reserve requirement ratio 
B)  lowering the bank rate; lowing the reserve requirement ratio 
C)  raising the bank rate; raising the reserve requirement ratio 
D)  raising the bank rate; lowering the reserve requirement ratio 
A)  lowering the bank rate; raising the reserve requirement ratio 
B)  lowering the bank rate; lowing the reserve requirement ratio 
C)  raising the bank rate; raising the reserve requirement ratio 
D)  raising the bank rate; lowering the reserve requirement ratio

Question 3

Which statement best describes the outcomes of a decrease in the reserve requirement in a fractional reserve system?

Accepted Answer

A)  Both the money multiplier and the money supply increase. 
B)  Both the money multiplier and the money supply decrease. 
C)  The money multiplier increases, but the money supply decreases. 
D)  The money multiplier decreases, but the money supply increases. 
A)  Both the money multiplier and the money supply increase. 
B)  Both the money multiplier and the money supply decrease. 
C)  The money multiplier increases, but the money supply decreases. 
D)  The money multiplier decreases, but the money supply increases.

Question 4

In Wellville, the money supply is $80,000 and reserves are $12,800. Assuming that people hold only deposits and no currency, and that banks hold only required reserves, what is the required reserve ratio?

Accepted Answer

A)  12 percent 
B)  14.5 percent 
C)  16 percent 
D)  29 percent 
A)  12 percent 
B)  14.5 percent 
C)  16 percent 
D)  29 percent

Question 5

When Arnold uses dollars to record his income and expenses, how is he using money?

Accepted Answer

A)  as a unit of account 
B)  as a means of payment 
C)  as a store of value 
D)  as a medium of exchange 
A)  as a unit of account 
B)  as a means of payment 
C)  as a store of value 
D)  as a medium of exchange

Question 6

Why was changing of reserve requirements phased out as a tool used by the Bank of Canada to control the money supply?

Accepted Answer

A)  to make the rules the same for all financial institutions since only credit unions were required to hold reserves 
B)  to make the rules the same for all financial institutions since only commercial banks were required to hold reserves 
C)  because Canada was the only country still imposing reserve requirements on its financial institutions 
D)  because the Bank of Canada was using it too frequently, causing disruption in the banks 
A)  to make the rules the same for all financial institutions since only credit unions were required to hold reserves 
B)  to make the rules the same for all financial institutions since only commercial banks were required to hold reserves 
C)  because Canada was the only country still imposing reserve requirements on its financial institutions 
D)  because the Bank of Canada was using it too frequently, causing disruption in the banks

Question 7

Which list ranks the Bank of Canada's monetary policy tools from most to least frequently used?

Accepted Answer

A)  bank rate changes; open-market transactions; reserve requirement changes 
B)  bank rate changes; reserve requirement changes; open-market transactions 
C)  open-market transactions; bank rate changes; reserve requirement changes 
D)  open-market transactions; reserve requirement changes; bank rate changes 
A)  bank rate changes; open-market transactions; reserve requirement changes 
B)  bank rate changes; reserve requirement changes; open-market transactions 
C)  open-market transactions; bank rate changes; reserve requirement changes 
D)  open-market transactions; reserve requirement changes; bank rate changes

Question 8

In 2018, what was the average currency holding of Canadian dollars relative to Canadian population?

Accepted Answer

A)  $791 
B)  $1791 
C)  $2791 
D)  $3791 
A)  $791 
B)  $1791 
C)  $2791 
D)  $3791

Question 9

Which list contains only actions that increase the money supply?

Accepted Answer

A)  raising the bank rate; making open-market purchases 
B)  raising the bank rate; making open-market sales 
C)  lowering the bank rate; making open-market purchases 
D)  lowering the bank rate; making open-market sales 
A)  raising the bank rate; making open-market purchases 
B)  raising the bank rate; making open-market sales 
C)  lowering the bank rate; making open-market purchases 
D)  lowering the bank rate; making open-market sales

Question 10

Madison puts money under her mattress so she can spend it later. Which function of money does this illustrate?

Accepted Answer

A)  store of value 
B)  medium of exchange 
C)  unit of account 
D)  wealth 
A)  store of value 
B)  medium of exchange 
C)  unit of account 
D)  wealth

Question 11

How can the Bank of Canada directly protect a bank during a bank run?

Accepted Answer

A)  by increasing reserve requirements 
B)  by selling government bonds to the bank 
C)  by lending reserves to the bank 
D)  by increasing the overnight rate 
A)  by increasing reserve requirements 
B)  by selling government bonds to the bank 
C)  by lending reserves to the bank 
D)  by increasing the overnight rate

Question 12

What characterizes currency?

Accepted Answer

A)  It has intrinsic value. 
B)  It has no intrinsic value. 
C)  It may be used as a medium of exchange but is not legal tender. 
D)  It performs all the functions of money except providing a unit of account. 
A)  It has intrinsic value. 
B)  It has no intrinsic value. 
C)  It may be used as a medium of exchange but is not legal tender. 
D)  It performs all the functions of money except providing a unit of account.

Question 13

How can the Bank of Canada increase the money supply?

Accepted Answer

A)  by conducting open-market sales and raising the bank rate 
B)  by conducting open-market sales and lowering the bank rate 
C)  by conducting open-market purchases and raising the bank rate 
D)  by conducting open-market purchases and lowering the bank rate 
A)  by conducting open-market sales and raising the bank rate 
B)  by conducting open-market sales and lowering the bank rate 
C)  by conducting open-market purchases and raising the bank rate 
D)  by conducting open-market purchases and lowering the bank rate

Question 14

Which of the following is NOT a tool of monetary policy?

Accepted Answer

A)  open-market operations 
B)  reserve requirements 
C)  changing the bank rate 
D)  increasing the tax rate 
A)  open-market operations 
B)  reserve requirements 
C)  changing the bank rate 
D)  increasing the tax rate

Question 15

Which statement best describes the outcomes of open-market purchases conducted by the Bank of Canada?

Accepted Answer

A)  Bank reserves increase, and the money supply increases. 
B)  Bank reserves increase, and the money supply decreases. 
C)  The Bank of Canada borrows from member banks, which increases the money supply. 
D)  The Bank of Canada lends money to member banks, which decreases the money supply. 
A)  Bank reserves increase, and the money supply increases. 
B)  Bank reserves increase, and the money supply decreases. 
C)  The Bank of Canada borrows from member banks, which increases the money supply. 
D)  The Bank of Canada lends money to member banks, which decreases the money supply.

Question 16

Which statement best defines the bank rate?

Accepted Answer

A)  It is the interest rate the Bank of Canada charges banks. 
B)  It is one divided by the difference between one and the reserve ratio. 
C)  It is the interest rate banks receive on reserve deposits with Bank of Canada. 
D)  It is the interest rate that banks charge on overnight loans to other banks. 
A)  It is the interest rate the Bank of Canada charges banks. 
B)  It is one divided by the difference between one and the reserve ratio. 
C)  It is the interest rate banks receive on reserve deposits with Bank of Canada. 
D)  It is the interest rate that banks charge on overnight loans to other banks.

Question 17

Who appoints the members of the Board of Directors at the Bank of Canada?

Accepted Answer

A)  the Governor General 
B)  the Minister of Finance 
C)  the Director of the IMF 
D)  the Prime Minister 
A)  the Governor General 
B)  the Minister of Finance 
C)  the Director of the IMF 
D)  the Prime Minister

Question 18

What is the interest rate the Bank of Canada charges on loans it makes to banks?

Accepted Answer

A)  the prime rate 
B)  the treasury rate 
C)  the bank rate 
D)  the Canada payments rate 
A)  the prime rate 
B)  the treasury rate 
C)  the bank rate 
D)  the Canada payments rate

Question 19

During the early 1930s, there were a number of bank failures. What did this do to the money supply? The central banks advocated open-market purchases. Would these purchases have reversed the change in the money supply and helped banks? Explain.

Accepted Answer

Bank failures cause people to lose confi

Question 20

-Refer to Table 10-3. If the Bank of Canada requires banks to hold 5 percent of deposits as reserves, how much in excess reserves does the Bank of Kamloops now hold?

Accepted Answer

A)  $5 
B)  $25 
C)  $60 
D)  $65 
A)  $5 
B)  $25 
C)  $60 
D)  $65

Marc puts prices on surfboards and skateboards at his sporting goods store. He is using money as a unit of account.

Which list contains only actions that increase the money supply?

Which statement best describes the outcomes of a decrease in the reserve requirement in a fractional reserve system?

In Wellville, the money supply is $80,000 and reserves are $12,800. Assuming that people hold only deposits and no currency, and that banks hold only required reserves, what is the required reserve ratio?

When Arnold uses dollars to record his income and expenses, how is he using money?

Why was changing of reserve requirements phased out as a tool used by the Bank of Canada to control the money supply?

Which list ranks the Bank of Canada's monetary policy tools from most to least frequently used?

In 2018, what was the average currency holding of Canadian dollars relative to Canadian population?

Which list contains only actions that increase the money supply?

Madison puts money under her mattress so she can spend it later. Which function of money does this illustrate?

How can the Bank of Canada directly protect a bank during a bank run?

What characterizes currency?

How can the Bank of Canada increase the money supply?

Which of the following is NOT a tool of monetary policy?

Which statement best describes the outcomes of open-market purchases conducted by the Bank of Canada?

Which statement best defines the bank rate?

Who appoints the members of the Board of Directors at the Bank of Canada?

What is the interest rate the Bank of Canada charges on loans it makes to banks?

During the early 1930s, there were a number of bank failures. What did this do to the money supply? The central banks advocated open-market purchases. Would these purchases have reversed the change in the money supply and helped banks? Explain.

-Refer to Table 10-3. If the Bank of Canada requires banks to hold 5 percent of deposits as reserves, how much in excess reserves does the Bank of Kamloops now hold?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

Unemployment and Its Natural Rate

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Small Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary Policy on Aggregate Demand

The Influence of Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

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Exam 10: The Monetary System

Marc puts prices on surfboards and skateboards at his sporting goods store. He is using money as a unit of account.

Which list contains only actions that increase the money supply?

Which statement best describes the outcomes of a decrease in the reserve requirement in a fractional reserve system?

In Wellville, the money supply is $80,000 and reserves are $12,800. Assuming that people hold only deposits and no currency, and that banks hold only required reserves, what is the required reserve ratio?

When Arnold uses dollars to record his income and expenses, how is he using money?

Why was changing of reserve requirements phased out as a tool used by the Bank of Canada to control the money supply?

Which list ranks the Bank of Canada's monetary policy tools from most to least frequently used?

In 2018, what was the average currency holding of Canadian dollars relative to Canadian population?

Which list contains only actions that increase the money supply?

Madison puts money under her mattress so she can spend it later. Which function of money does this illustrate?

How can the Bank of Canada directly protect a bank during a bank run?

What characterizes currency?

How can the Bank of Canada increase the money supply?

Which of the following is NOT a tool of monetary policy?

Which statement best describes the outcomes of open-market purchases conducted by the Bank of Canada?

Which statement best defines the bank rate?

Who appoints the members of the Board of Directors at the Bank of Canada?

What is the interest rate the Bank of Canada charges on loans it makes to banks?

During the early 1930s, there were a number of bank failures. What did this do to the money supply? The central banks advocated open-market purchases. Would these purchases have reversed the change in the money supply and helped banks? Explain.

-Refer to Table 10-3. If the Bank of Canada requires banks to hold 5 percent of deposits as reserves, how much in excess reserves does the Bank of Kamloops now hold?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

Unemployment and Its Natural Rate

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Small Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary Policy on Aggregate Demand

The Influence of Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

Filters