Question 1

Which of the following is NOT a function of the Bank of Canada?

Accepted Answer

A)  holding member banks' reserves on deposit 
B)  holding deposits of households and firms 
C)  issuing bank notes 
D)  serving as bankers to the federal government 
A)  holding member banks' reserves on deposit 
B)  holding deposits of households and firms 
C)  issuing bank notes 
D)  serving as bankers to the federal government B

Question 2

When does government receive seigniorage?

Accepted Answer

A)  whenever it sells gold to people for money 
B)  whenever it sells goods and services it produces for money 
C)  whenever it uses money to buy goods and services 
D)  whenever it mints coins whose face value is greater than the value of the resources used in producing the money 
A)  whenever it sells gold to people for money 
B)  whenever it sells goods and services it produces for money 
C)  whenever it uses money to buy goods and services 
D)  whenever it mints coins whose face value is greater than the value of the resources used in producing the money D

Question 3

Under a narrow definition of money, which one of the following is NOT money in the Canadian economy?

Accepted Answer

A)  a chequing account at a bank in Canada 
B)  a 25-cent Bank of Canada coin 
C)  a $20 Bank of Canada note 
D)  a $100 Government of Canada bond 
A)  a chequing account at a bank in Canada 
B)  a 25-cent Bank of Canada coin 
C)  a $20 Bank of Canada note 
D)  a $100 Government of Canada bond D

Question 4

What was the first step in the evolution of money?

Accepted Answer

A)  physical commodities 
B)  barter 
C)  pieces of paper representing claims on physical commodities 
D)  pieces of paper with no intrinsic value 
A)  physical commodities 
B)  barter 
C)  pieces of paper representing claims on physical commodities 
D)  pieces of paper with no intrinsic value

Question 5

How is the value of money fundamentally determined?

Accepted Answer

A)  by the reputation of the bank that holds it 
B)  by the reputation of the person who holds it 
C)  by the amount of gold or silver for which it can be redeemed 
D)  by the value of the commodities for which it can be traded 
A)  by the reputation of the bank that holds it 
B)  by the reputation of the person who holds it 
C)  by the amount of gold or silver for which it can be redeemed 
D)  by the value of the commodities for which it can be traded

Question 6

Which of the following describes the cycle of events that led up to the economic crisis in the United States in 2008?

Accepted Answer

A)  Demand for houses decreased, which lowered housing prices, which in turn fuelled a boom in subprime loans. 
B)  Demand for housing decreased, which raised housing prices, which in turn fuelled a boom in subprime loans. 
C)  Demand for housing increased, which lowered housing prices, which in turn fuelled a boom in subprime mortgages. 
D)  Demand for housing increased, which raised housing prices, which in turn fuelled a boom in subprime loans. 
A)  Demand for houses decreased, which lowered housing prices, which in turn fuelled a boom in subprime loans. 
B)  Demand for housing decreased, which raised housing prices, which in turn fuelled a boom in subprime loans. 
C)  Demand for housing increased, which lowered housing prices, which in turn fuelled a boom in subprime mortgages. 
D)  Demand for housing increased, which raised housing prices, which in turn fuelled a boom in subprime loans.

Question 7

Why is barter more feasible in primitive societies than in modern societies?

Accepted Answer

A)  because inflation does NOT exist in primitive societies 
B)  because many goods are available for trade in primitive societies, therefore people can always find the goods that they want 
C)  because specialization is limited and thus few goods are available for trade in primitive societies 
D)  because specialization is limited and thus many goods are available for trade in primitive societies 
A)  because inflation does NOT exist in primitive societies 
B)  because many goods are available for trade in primitive societies, therefore people can always find the goods that they want 
C)  because specialization is limited and thus few goods are available for trade in primitive societies 
D)  because specialization is limited and thus many goods are available for trade in primitive societies

Question 8

The Canada Deposit Insurance Corporation insures bank deposits.As of 2015, what was the extent of the Corporation's insurance coverage?

Accepted Answer

A)  $2,0000 per depositor per bank 
B)  $60,000 per depositor per bank 
C)  $100,000 per depositor per bank 
D)  $200,0000 per depositor per bank 
A)  $2,0000 per depositor per bank 
B)  $60,000 per depositor per bank 
C)  $100,000 per depositor per bank 
D)  $200,0000 per depositor per bank

Question 9

What will happen if a nation's official money fails to serve as a medium of exchange?

Accepted Answer

A)  Economic efficiency will increase. 
B)  Resources must be diverted from production to exchange. 
C)  Transactions costs of exchange will decrease. 
D)  Fewer barter exchanges will be completed. 
A)  Economic efficiency will increase. 
B)  Resources must be diverted from production to exchange. 
C)  Transactions costs of exchange will decrease. 
D)  Fewer barter exchanges will be completed.

Question 10

Mary-Ellen deposits $100 per month into her bank account.Her daughter Carolyn keeps all her pennies in a piggy bank.What money function is illustrated by both of these examples?

Accepted Answer

A)  a store of value 
B)  commodity money 
C)  a medium of exchange 
D)  a unit of account 
A)  a store of value 
B)  commodity money 
C)  a medium of exchange 
D)  a unit of account

Question 11

Under what circumstances is it less likely that a double coincidence of wants will exist and more likely that a monetary exchange will develop?

Accepted Answer

A)  when labour is more specialized 
B)  when labour is less specialized 
C)  when labour is NOT specialized 
D)  when labour is self-sufficient 
A)  when labour is more specialized 
B)  when labour is less specialized 
C)  when labour is NOT specialized 
D)  when labour is self-sufficient

Question 12

In the world of banking, what are cheques?

Accepted Answer

A)  written instructions from a depositor to the bank 
B)  a form of commodity money 
C)  token money 
D)  fiat money 
A)  written instructions from a depositor to the bank 
B)  a form of commodity money 
C)  token money 
D)  fiat money

Question 13

What activity does the Bank of Canada undertake when it carries out open-market operations?

Accepted Answer

A)  It buys and sells the bonds, but NOT the notes, of leading Canadian corporations. 
B)  It changes the overnight loans rate, which generally increases the amount of available credit. 
C)  It provides funds so that healthy depository institutions can purchase weaker ones on the open market. 
D)  It deals in the purchase and sale of government securities. 
A)  It buys and sells the bonds, but NOT the notes, of leading Canadian corporations. 
B)  It changes the overnight loans rate, which generally increases the amount of available credit. 
C)  It provides funds so that healthy depository institutions can purchase weaker ones on the open market. 
D)  It deals in the purchase and sale of government securities.

Question 14

What is fiat money backed by?

Accepted Answer

A)  gold or silver 
B)  fractional reserves 
C)  the promise of a bank to redeem it upon presentation 
D)  nothing 
A)  gold or silver 
B)  fractional reserves 
C)  the promise of a bank to redeem it upon presentation 
D)  nothing

Question 15

What is a subprime mortgage?

Accepted Answer

A)  a mortgage in which the borrower gets an interest rate below the prime rate 
B)  a mortgage in which the interest rate is adjustable 
C)  a mortgage for which the home is valued below its true market value 
D)  a mortgage in which the borrower has a poor credit rating 
A)  a mortgage in which the borrower gets an interest rate below the prime rate 
B)  a mortgage in which the interest rate is adjustable 
C)  a mortgage for which the home is valued below its true market value 
D)  a mortgage in which the borrower has a poor credit rating

Question 16

Which of the following would NOT perform well as money?

Accepted Answer

A)  coins 
B)  sea shells 
C)  cigarettes 
D)  diamonds 
A)  coins 
B)  sea shells 
C)  cigarettes 
D)  diamonds

Question 17

Which of the following describes barter?

Accepted Answer

A)  Production requires a particular kind of labour. 
B)  The overall skill level of labour is increasing. 
C)  Individuals make goods that they are relatively capable of producing, and then trade them for goods produced by other individuals. 
D)  Individuals achieve self-sufficiency in production. 
A)  Production requires a particular kind of labour. 
B)  The overall skill level of labour is increasing. 
C)  Individuals make goods that they are relatively capable of producing, and then trade them for goods produced by other individuals. 
D)  Individuals achieve self-sufficiency in production.

Question 18

Which of the following describes specialization of labour?

Accepted Answer

A)  Production requires a particular kind of labour. 
B)  The overall skill level of labour is increasing. 
C)  Individuals produce goods other than those they want to consume. 
D)  Individuals achieve self-sufficiency in production. 
A)  Production requires a particular kind of labour. 
B)  The overall skill level of labour is increasing. 
C)  Individuals produce goods other than those they want to consume. 
D)  Individuals achieve self-sufficiency in production.

Question 19

What does the term commodity money refer to?

Accepted Answer

A)  a type of money that has no intrinsic value 
B)  a type of money that has intrinsic value 
C)  a type of money that is based on a valuable metal 
D)  a type of money whose value never changes 
A)  a type of money that has no intrinsic value 
B)  a type of money that has intrinsic value 
C)  a type of money that is based on a valuable metal 
D)  a type of money whose value never changes

Question 20

What is the composition of the Board of Directors of the Bank of Canada?

Accepted Answer

A)  governor, senior deputy governor, deputy minister of finance, and 12 directors 
B)  the governor, senior deputy governor, and 12 directors 
C)  the governor and 12 directors 
D)  governor, deputy minister of finance, and 12 directors 
A)  governor, senior deputy governor, deputy minister of finance, and 12 directors 
B)  the governor, senior deputy governor, and 12 directors 
C)  the governor and 12 directors 
D)  governor, deputy minister of finance, and 12 directors

Which of the following is NOT a function of the Bank of Canada?

When does government receive seigniorage?

Under a narrow definition of money, which one of the following is NOT money in the Canadian economy?

What was the first step in the evolution of money?

How is the value of money fundamentally determined?

Which of the following describes the cycle of events that led up to the economic crisis in the United States in 2008?

Why is barter more feasible in primitive societies than in modern societies?

The Canada Deposit Insurance Corporation insures bank deposits.As of 2015, what was the extent of the Corporation's insurance coverage?

What will happen if a nation's official money fails to serve as a medium of exchange?

Mary-Ellen deposits $100 per month into her bank account.Her daughter Carolyn keeps all her pennies in a piggy bank.What money function is illustrated by both of these examples?

Under what circumstances is it less likely that a double coincidence of wants will exist and more likely that a monetary exchange will develop?

In the world of banking, what are cheques?

What activity does the Bank of Canada undertake when it carries out open-market operations?

What is fiat money backed by?

What is a subprime mortgage?

Which of the following would NOT perform well as money?

Which of the following describes barter?

Which of the following describes specialization of labour?

What does the term commodity money refer to?

What is the composition of the Board of Directors of the Bank of Canada?

The Art and Science of Economic Analysis

Economic Tools and Economic Systems

Economic Decision Makers

Demand, Supply, and Markets

Algebraic Approach to Demand, Supply, and Equilibrium

Introduction to Macroeconomics

Tracking the Canadian Economy

Unemployment and Inflation

Productivity and Growth

Aggregate Expenditure and Aggregate Demand

Aggregate Supply

Fiscal Policy

Banking and the Money Supply

Monetary Theory and Policy in an Open Economy

Macro Policy Debate: Active or Passive

International Finance

International Trade

Economic Development

Understanding Graphs

Filters

Exam 13: Money and the Financial System

Which of the following is NOT a function of the Bank of Canada?

When does government receive seigniorage?

Under a narrow definition of money, which one of the following is NOT money in the Canadian economy?

What was the first step in the evolution of money?

How is the value of money fundamentally determined?

Which of the following describes the cycle of events that led up to the economic crisis in the United States in 2008?

Why is barter more feasible in primitive societies than in modern societies?

The Canada Deposit Insurance Corporation insures bank deposits.As of 2015, what was the extent of the Corporation's insurance coverage?

What will happen if a nation's official money fails to serve as a medium of exchange?

Mary-Ellen deposits $100 per month into her bank account.Her daughter Carolyn keeps all her pennies in a piggy bank.What money function is illustrated by both of these examples?

Under what circumstances is it less likely that a double coincidence of wants will exist and more likely that a monetary exchange will develop?

In the world of banking, what are cheques?

What activity does the Bank of Canada undertake when it carries out open-market operations?

What is fiat money backed by?

What is a subprime mortgage?

Which of the following would NOT perform well as money?

Which of the following describes barter?

Which of the following describes specialization of labour?

What does the term commodity money refer to?

What is the composition of the Board of Directors of the Bank of Canada?

The Art and Science of Economic Analysis

Economic Tools and Economic Systems

Economic Decision Makers

Demand, Supply, and Markets

Algebraic Approach to Demand, Supply, and Equilibrium

Introduction to Macroeconomics

Tracking the Canadian Economy

Unemployment and Inflation

Productivity and Growth

Aggregate Expenditure and Aggregate Demand

Aggregate Supply

Fiscal Policy

Banking and the Money Supply

Monetary Theory and Policy in an Open Economy

Macro Policy Debate: Active or Passive

International Finance

International Trade

Economic Development

Understanding Graphs

Filters