Exam 4: The Monetary System: What It Is and How It Works

Table: Bank Balance Sheet Based on the table, owners' equity will fall to zero if loan defaults reduce the value of total assets by _____ percent.

Compared to typical open-market operations, when engaging in quantitative easing operations conducted by the Federal Reserve between 2007 and 2011, Federal Reserve purchases tended to be _____ securities.

High-powered money is another name for:

A trade in a barter economy requires:

As the 2008-2009 financial crisis unfolded, one major U.S. bank had a leverage ratio of 50. In Canada regulators put a ceiling of 20 on bank leverage ratios. Compare the change in asset values that would push the capital in the U.S. bank to zero with the change required to eliminate capital in a Canadian bank at the ceiling-leverage ratio. What is the implication of the differences in maximum leverage ratios for the stability of the banking system?

The quantitative easing policy conducted by the Federal Reserve between 2007 and 2011 resulted in a large increase in the monetary base that was partially offset by:

In a fractional-reserve banking system, banks create money because:

The value of a bank's owners' equity is called bank:

As the Canadian economy approached the millennium, January 1, 2000, many people cautiously began to hold larger than normal quantities of currency as protection against a possible disruption of banking services that could result from computer glitches (the so-called Y2K bug). a.How did this greater preference for currency affect the money supply? b.How could the Bank of Canada offset such an increase in currency preferences?

All of the following are considered major functions of money except as a:

What is the effect of the following on the money supply? a. Increase in currency-deposit ratio, keeping all other things constant b. Decrease in reserve-deposit ratio, keeping all other things constant

Table: Bank Balance Sheet Based on the table, what is the leverage ratio at the bank?

When the Bank of Canada conducts an open-market purchase, it buys bonds from the:

Assets of banks include:

An important factor in the evolution of commodity money to fiat money is:

When a pizza maker lists the price of a pizza as $10, this is an example of using money as a:

Credit card balances are included in:

Minimum reserve requirements:

The most frequently used tool of monetary policy in Canada to influence the money supply is:

In Canada, the money supply is determined: