Question 1

If a society chooses to use fiat money, it

Accepted Answer

A) must guarantee the convertibility of its currency into gold. 
B) give its central bank independence. 
C) cannot make use of a banking system. 
D) must have a mechanism for regulating the quantity of money in the economy. 
A) must guarantee the convertibility of its currency into gold. 
B) give its central bank independence. 
C) cannot make use of a banking system. 
D) must have a mechanism for regulating the quantity of money in the economy.

Question 2

Discuss the constraints on bank lending.

Accepted Answer

Banks create money by lending, but a num

Question 3

What are the two main functions of central banks?

Accepted Answer

Most central banks have two main functio

Question 4

If the central bank wishes to contract the money supply, it could do any of the following: sell government bonds, raise the reserve requirement, and raise the refinancing rate.

Accepted Answer

A) True 
 B)False

Question 5

A repurchase agreement is an agreement between the central bank and a commercial bank whereby a bond or other non-monetary asset is sold by one to the other with an agreement to reverse the transaction a short time later.

Accepted Answer

A) True 
 B)False

Question 6

Which one of the following is NOT true?

Accepted Answer

A) The difference between the price at which a commercial bank sells an asset to the central bank and the price it agrees to buy it back can be expressed as an annualized percentage of the selling price, and this is called the refinancing rate. 
B) Commercial banks may borrow from and lend to each other, and the interest rate at which they do this is called the refinancing rate. 
C) In SA the refinancing rate is known as the repo rate, and in the USA it is referred to as the discount rate. 
D) If the central bank has bought some assets from a commercial bank with an agreement that the commercial bank will buy them back at a later date, then this would be called a repo. 
A) The difference between the price at which a commercial bank sells an asset to the central bank and the price it agrees to buy it back can be expressed as an annualized percentage of the selling price, and this is called the refinancing rate. 
B) Commercial banks may borrow from and lend to each other, and the interest rate at which they do this is called the refinancing rate. 
C) In SA the refinancing rate is known as the repo rate, and in the USA it is referred to as the discount rate. 
D) If the central bank has bought some assets from a commercial bank with an agreement that the commercial bank will buy them back at a later date, then this would be called a repo.

Question 7

Discuss the role of the South African Reserve Bank.

Accepted Answer

The primary objective of the SARB is to

Question 8

Money has three functions: It acts as a medium of exchange, a unit of account, and a hedge against inflation.

Accepted Answer

A) True 
 B)False

Question 9

What is the difference between money and wealth?

Accepted Answer

Money is defined as the set of

Question 10

Which of the following policy actions by a central bank is likely to increase the money supply?

Accepted Answer

A) Increasing the refinancing rate. 
B) All of these will increase the money supply. 
C) Buying government bonds in open market operations. 
D) Increasing reserve requirements. 
A) Increasing the refinancing rate. 
B) All of these will increase the money supply. 
C) Buying government bonds in open market operations. 
D) Increasing reserve requirements.

Question 11

Which of the following is an example of barter?

Accepted Answer

A) A parent gives a teenager a R100 note in exchange for her babysitting services. 
B) A homeowner gives an exterminator a cheque for R500 in exchange for extermination services. 
C) A barber gives a plumber a haircut in exchange for the plumber fixing the barber's leaky tap. 
D) All of the above are examples of barter. 
A) A parent gives a teenager a R100 note in exchange for her babysitting services. 
B) A homeowner gives an exterminator a cheque for R500 in exchange for extermination services. 
C) A barber gives a plumber a haircut in exchange for the plumber fixing the barber's leaky tap. 
D) All of the above are examples of barter.

Question 12

What is the repo rate?

Accepted Answer

The central bank of an economy will set

Question 13

When the central bank in an economy raises the repo rate it encourages commercial banks to reduce their lending, thereby tending to reduce the money supply.

Accepted Answer

A) True 
 B)False

Question 14

A(n) _________ card is used as a means of transferring money between accounts.

Accepted Answer

A) asset 
B) debit 
C) loan 
D) bond. 
A) asset 
B) debit 
C) loan 
D) bond.

Question 15

If there is a general shortage of liquidity in the money market then

Accepted Answer

A) the long term interest rate in the economy will rise, and the central bank will raise its interest rate in response. 
B) the economy's banking system will lend more money to households and firms. 
C) the short term interest rate at which the economy's commercial banks lend to and borrow from each other will fall, and the central bank may be expected to reduce the supply of liquidity to the banks. 
D) the short term interest rate at which the economy's commercial banks lend to and borrow from each other will rise, and the central bank may be expected to increase the supply of liquidity to the banks. 
A) the long term interest rate in the economy will rise, and the central bank will raise its interest rate in response. 
B) the economy's banking system will lend more money to households and firms. 
C) the short term interest rate at which the economy's commercial banks lend to and borrow from each other will fall, and the central bank may be expected to reduce the supply of liquidity to the banks. 
D) the short term interest rate at which the economy's commercial banks lend to and borrow from each other will rise, and the central bank may be expected to increase the supply of liquidity to the banks.

Question 16

When an economy uses gold as money or uses paper money that is convertible into gold on demand, it is said to be operating under a

Accepted Answer

A) gold standard. 
B) silver standard. 
C) credit account. 
D) bank account. 
A) gold standard. 
B) silver standard. 
C) credit account. 
D) bank account.

Question 17

What are the paper notes and metal coins that are held in the hands of the public called?

Accepted Answer

A) Currency. 
B) Accounts. 
C) Bonds. 
D) Stock. 
A) Currency. 
B) Accounts. 
C) Bonds. 
D) Stock.

Question 18

The money market refers to the market in which the commercial banks lend money to one another on a short term basis.

Accepted Answer

A) True 
 B)False

If a society chooses to use fiat money, it

Discuss the constraints on bank lending.

What are the two main functions of central banks?

If the central bank wishes to contract the money supply, it could do any of the following: sell government bonds, raise the reserve requirement, and raise the refinancing rate.

A repurchase agreement is an agreement between the central bank and a commercial bank whereby a bond or other non-monetary asset is sold by one to the other with an agreement to reverse the transaction a short time later.

Which one of the following is NOT true?

Discuss the role of the South African Reserve Bank.

Money has three functions: It acts as a medium of exchange, a unit of account, and a hedge against inflation.

What is the difference between money and wealth?

Which of the following policy actions by a central bank is likely to increase the money supply?

Which of the following is an example of barter?

What is the repo rate?

When the central bank in an economy raises the repo rate it encourages commercial banks to reduce their lending, thereby tending to reduce the money supply.

A(n) _________ card is used as a means of transferring money between accounts.

If there is a general shortage of liquidity in the money market then

When an economy uses gold as money or uses paper money that is convertible into gold on demand, it is said to be operating under a

What are the paper notes and metal coins that are held in the hands of the public called?

The money market refers to the market in which the commercial banks lend money to one another on a short term basis.

What Is Economics

Thinking Like an Economist

Measuring a Nations Well-Being

Measuring the Cost of Living

Production and Growth

Unemployment

Saving, Investment and the Financial System

The Basic Tools of Finance

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Business Cycles

Keynesian Economics and the Is-Lm Analysis

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short Run Trade-Off Between Inflation and Unemployment

Supply Side Policies

The Financial Crisis and Sovereign Debt

Common Currency Areas and European Monetary Union

Filters

Exam 9: The Monetary System

If a society chooses to use fiat money, it

Discuss the constraints on bank lending.

What are the two main functions of central banks?

If the central bank wishes to contract the money supply, it could do any of the following: sell government bonds, raise the reserve requirement, and raise the refinancing rate.

A repurchase agreement is an agreement between the central bank and a commercial bank whereby a bond or other non-monetary asset is sold by one to the other with an agreement to reverse the transaction a short time later.

Which one of the following is NOT true?

Discuss the role of the South African Reserve Bank.

Money has three functions: It acts as a medium of exchange, a unit of account, and a hedge against inflation.

What is the difference between money and wealth?

Which of the following policy actions by a central bank is likely to increase the money supply?

Which of the following is an example of barter?

What is the repo rate?

When the central bank in an economy raises the repo rate it encourages commercial banks to reduce their lending, thereby tending to reduce the money supply.

A(n) _________ card is used as a means of transferring money between accounts.

If there is a general shortage of liquidity in the money market then

When an economy uses gold as money or uses paper money that is convertible into gold on demand, it is said to be operating under a

What are the paper notes and metal coins that are held in the hands of the public called?

The money market refers to the market in which the commercial banks lend money to one another on a short term basis.

What Is Economics

Thinking Like an Economist

Measuring a Nations Well-Being

Measuring the Cost of Living

Production and Growth

Unemployment

Saving, Investment and the Financial System

The Basic Tools of Finance

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Business Cycles

Keynesian Economics and the Is-Lm Analysis

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short Run Trade-Off Between Inflation and Unemployment

Supply Side Policies

The Financial Crisis and Sovereign Debt

Common Currency Areas and European Monetary Union

Filters