Exam 10: The Monetary System

Table 29-4 The following information pertains to the Bank of Edmonton. -Refer to Table 29-4. Assume that all other banks hold only the required 5 percent of deposits as reserves and people hold only deposits and no currency. If the Bank of Edmonton decides to hold exactly 5 percent reserves, by how much would the economy's money supply increase?

M1 includes savings deposits.

Which of the following is one of the functions of the Bank of Canada?

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

Which of the following is a generally accepted medium of exchange?

Given the size of the Canadian money stock, is the amount of currency per person reasonable?

Which two of the Ten Principles of Economics imply that the Bank of Canada can profoundly affect the economy?

Suppose an economy has no money, and people use gold for all payments. a.Discuss the effects of economic growth (an increase in the amount of goods and services that the economy produces) on prices. b.What happens to prices when more gold becomes available, say due to new openings of gold mines? c.Who determines the economy's money supply?dDiscuss the advantages and disadvantages of such a "gold standard" economy.

Which of the following is a characteristic of the Bank of Nova Scotia?

Which of the following best describes the process of open market sales conducted by the Bank of Canada?

How does M1 compare with M2?

What do economists use the word "money" to refer to?

Table 29-5 The following information pertains to the Bank of Kingston. -Refer to Table 29-5. If all banks hold only the required 4 percent of deposits as reserves, then what is the money multiplier?

If the Bank of Canada buys bonds in the open market, the money supply decreases.

Which of the following best defines barter?

Suppose a bank has $10 000 in deposits and $7000 in loans. What is its reserve ratio?

Economists argue that the move from barter to money increased trade and production. How is this possible?

Which of the following best defines liquidity?

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

How may the Bank of Canada influence the price level?