Question 1

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 A

Question 2

What are electronic payments? how do they reduce transaction costs? by how much?

Accepted Answer

In the past when paying bills you had to mail a cheque but now banks provide a website in which you log on,make a few clicks and make the payment that is transmitted electronically.You can even avoid logging in as reoccurring bills can be automatically deducted from your bank account.Electronic payments reduce transaction costs as you do not have to pay a stamp to send a cheque and also you save time paying your bills electronically.Estimated cost savings when a bill is paid electronically rather than a cheques exceed one dollar.

Question 3

Which of the following is included in M2+ but not in M2?

Accepted Answer

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

Question 4

________ 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 5

If there are four goods in a barter economy,then one needs to know ________ prices in order to exchange one good for another.

Accepted Answer

A)  8 
B)  6 
C)  5 
D)  4 
A)  8 
B)  6 
C)  5 
D)  4

Question 6

Because it is a unit of account,money ________.

Accepted Answer

A)  increases transaction costs 
B)  reduces the number of prices that need to be calculated 
C)  does not earn interest 
D)  discourages specialization 
A)  increases transaction costs 
B)  reduces the number of prices that need to be calculated 
C)  does not earn interest 
D)  discourages specialization

Question 7

In explaining the evolution of money,________.

Accepted Answer

A)  government regulation is the most important factor 
B)  commodity money, because it is valued more highly, tends to drive out paper money 
C)  new forms of money evolve to lower transaction costs 
D)  paper money is always backed by gold and therefore more desirable than cheques 
A)  government regulation is the most important factor 
B)  commodity money, because it is valued more highly, tends to drive out paper money 
C)  new forms of money evolve to lower transaction costs 
D)  paper money is always backed by gold and therefore more desirable than cheques

Question 8

An individual's annual salary is her ________.

Accepted Answer

A)  money 
B)  income 
C)  wealth 
D)  liabilities 
A)  money 
B)  income 
C)  wealth 
D)  liabilities

Question 9

A fall in the level of prices ________.

Accepted Answer

A)  does not affect the value of money 
B)  has an uncertain effect on the value of money 
C)  increases the value of money 
D)  reduces the value of money 
A)  does not affect the value of money 
B)  has an uncertain effect on the value of money 
C)  increases the value of money 
D)  reduces the value of money

Question 10

Why are most of the U.S.dollars held outside of the United States?

Accepted Answer

Concern about high inflation e

Question 11

Which of the following is a true statement?

Accepted Answer

A)  Money and income are flow variables. 
B)  Money is a flow variable. 
C)  Income is a flow variable. 
D)  Money and income are stock variables. 
A)  Money and income are flow variables. 
B)  Money is a flow variable. 
C)  Income is a flow variable. 
D)  Money and income are stock variables.

Question 12

A hyperinflation is ________.

Accepted Answer

A)  a period of extreme inflation generally greater than 50 percent per month 
B)  a period of anxiety caused by rising prices 
C)  an increase in output caused by higher prices 
D)  impossible today because of tighter regulations 
A)  a period of extreme inflation generally greater than 50 percent per month 
B)  a period of anxiety caused by rising prices 
C)  an increase in output caused by higher prices 
D)  impossible today because of tighter regulations

Question 13

Explain the concepts of wealth and income and how they relate to the concept of money.

Accepted Answer

Non-economists often use money synonomou

Question 14

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 15

Data show that an average Canadian and American citizens hold CA$1500 and US$2000 of their currency respectively.Since money is bulky,it can be stolen,pays no interest and in general we do not see our fellow Canadians holding $1500 in their pockets,where are these dollars and who is holding them?

Accepted Answer

One group that hold big amounts of curre

Question 16

Currency is defined as ________.

Accepted Answer

A)  anything accepted for payment of goods and services 
B)  paper money and coins 
C)  a unit of account 
D)  foreign exchange 
A)  anything accepted for payment of goods and services 
B)  paper money and coins 
C)  a unit of account 
D)  foreign exchange

Question 17

Of money's three functions,the one that distinguishes money from other assets is its function as a ________.

Accepted Answer

A)  store of value 
B)  unit of account 
C)  standard of deferred payment 
D)  medium of exchange 
A)  store of value 
B)  unit of account 
C)  standard of deferred payment 
D)  medium of exchange

Question 18

In the money index used by the Bank of Canada: M = X1+X2+ ...+Xn,the Xs are ________.

Accepted Answer

A)  the proportional weights for calculating M 
B)  the increasing weights in calculating M 
C)  the n monetary components of M 
D)  the decreasing weights in calculating M 
A)  the proportional weights for calculating M 
B)  the increasing weights in calculating M 
C)  the n monetary components of M 
D)  the decreasing weights in calculating M

Question 19

Money is ________.

Accepted Answer

A)  the same as currency 
B)  anything that is generally accepted in payment of goods or services or in the repayment of debts 
C)  not used as a unit of account 
D)  defined as paper money and coins 
A)  the same as currency 
B)  anything that is generally accepted in payment of goods or services or in the repayment of debts 
C)  not used as a unit of account 
D)  defined as paper money and coins

Question 20

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

Exam 3: What Is Money

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

What are electronic payments? how do they reduce transaction costs? by how much?

Which of the following is included in M2+ but not in M2?

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

If there are four goods in a barter economy,then one needs to know ________ prices in order to exchange one good for another.

Because it is a unit of account,money ________.

In explaining the evolution of money,________.

An individual's annual salary is her ________.

A fall in the level of prices ________.

Why are most of the U.S.dollars held outside of the United States?

Which of the following is a true statement?

A hyperinflation is ________.

Explain the concepts of wealth and income and how they relate to the concept of money.

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

Data show that an average Canadian and American citizens hold CA$1500 and US$2000 of their currency respectively.Since money is bulky,it can be stolen,pays no interest and in general we do not see our fellow Canadians holding $1500 in their pockets,where are these dollars and who is holding them?

Currency is defined as ________.

Of money's three functions,the one that distinguishes money from other assets is its function as a ________.

In the money index used by the Bank of Canada: M = X1+X2+ ...+Xn,the Xs are ________.

Money is ________.

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

Why Study Money, banking, and Financial Markets

An Overview of the Financial System

Understanding 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

Financial Crises

Economic Analysis of Financial Regulation

Banking Industry: Structure and Competition

Nonbank Finance

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

The ISLM Model

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