Exam 26: Money and Banking

Bank West's Balance Sheet Assets Liabilities Cash $500 Deposits $20 000 Deposits at Bank of Canada $700 Capital $1 000 Loans and Mortgages $19 800 $21 000 $21 000 TABLE 26-3 -Refer to Table 26-3.Assume that Bank West is operating at its target reserve ratio and has no excess reserves.If Bank West receives a new deposit of $1500,it can immediately expand its loans by ________ while maintaining its target reserve ratio.

Which of the following examples constitutes a new deposit to the Canadian commercial banking system?

If the target reserve ratio in the banking system is 20%,there is no cash drain,and there are no excess reserves,a new deposit of $1 will lead to an eventual expansion of the money supply of

Suppose you found a $100 bill that was lost for many years under your grandmother's mattress and you decided to deposit this money in a commercial bank.If the target reserve ratio were 20% and all excess reserves were lent out,your new deposit of $100 would lead to an eventual expansion of the money supply of

Which of the following was the most important initial step in the evolution of paper currency?

A central bank can "create" money by

Which of the following statements best describes the relationship between the Bank of Canada and the Government of Canada?

Consider the following situation in the Canadian banking system: ∙ An investment dealer withdraws $10 million from its account at Bank XYZ to purchase government securities from the Bank of Canada. ∙ As a result,$10 million has been withdrawn from the Canadian banking system. ∙ The target reserve ratio for all banks is 10%. ∙ All commercial banks operate with no excess reserves. ∙ There is no cash drain. TABLE 26-5 -Refer to Table 26-5.As a result of this withdrawal from the banking system,the Canadian banking system would eventually

The function of money in an economy is to serve as 1)a unit of account; 2)a store of value; 3)a medium of exchange.

Suppose a commercial bank has a level of target reserves of $500 million and actual reserves of $575 million.This bank's ________ is/are $75 million.

Basic functions of the Bank of Canada include 1)acting as lender of last resort to private non-financial corporations; 2)acting as banker for the chartered banks. 3)regulating the money supply.

If the target reserve ratio in the banking system is 10%,there is no cash drain,and there are no excess reserves,a new deposit of $1 will lead to an eventual expansion of the money supply of

If all the banks in the banking system collectively have $20 million in cash reserves and have a target reserve ratio of 5%,the maximum amount of deposits the banking system can support is

Other things being equal,a rise in the price level will

Commercial banks in Canada are prohibited by law from

When metal coins,such as gold and silver,were used as money,a technique which helped to prevent the reduction of their value through clipping was

The financial crisis that occurred in 2007 and 2008 highlighted one of the crucial functions of commercial banks and other financial institutions in developed economies.A crucial function that ceased to work smoothly during this time,and contributed to the global recession that began in 2008,was

Without a central bank,commercial banks in Canada would probably hold ________ reserves than they do now,resulting in a ________ money supply than at present.

A commercial bank's target reserve ratio is the

The major advantage of using money rather than barter is that