Question 1

If the reserve-deposit ratio is 5% and the banking system receives an additional $10 million in reserves,bank deposits will increase by

Accepted Answer

A)  $4 million. 
B)  $10 million. 
C)  $40 million. 
D)  $200 million. 
E)  $400 million. 
A)  $4 million. 
B)  $10 million. 
C)  $40 million. 
D)  $200 million. 
E)  $400 million.

Question 2

The M2 measure of money consists of the sum of

Accepted Answer

A)  chequing deposits,saving deposits at banks,and foreign currency deposits. 
B)  currency,non-personal demand and notice deposits,and personal deposits. 
C)  currency and non-personal demand and notice deposits. 
D)  deposits at non-bank financial institutions,and money market mutual funds. 
E)  non-personal term deposits,and foreign currency deposits at banks. 
A)  chequing deposits,saving deposits at banks,and foreign currency deposits. 
B)  currency,non-personal demand and notice deposits,and personal deposits. 
C)  currency and non-personal demand and notice deposits. 
D)  deposits at non-bank financial institutions,and money market mutual funds. 
E)  non-personal term deposits,and foreign currency deposits at banks.

Question 3

Monetary policy changes in Canada typically involve changes to

Accepted Answer

A)  reserve-deposit ratios. 
B)  the bank rate. 
C)  open-market purchases. 
D)  the key policy rate. 
E)  market interest rates. 
A)  reserve-deposit ratios. 
B)  the bank rate. 
C)  open-market purchases. 
D)  the key policy rate. 
E)  market interest rates.

Question 4

A bank run is an episode in which

Accepted Answer

A)  depositors,spurred by news or rumours of the possible bankruptcy of multiple banks,rush to withdraw deposits from the banking system. 
B)  depositors,spurred by news or rumours of the possible bankruptcy of a particular bank,rush to withdraw deposits from that bank. 
C)  commercial banks,concerned about high interest rates,rush to borrow from the overnight market. 
D)  depositors,afraid of increasing interest rates,attempt to engage in borrowing from the Bank of Canada. 
E)  the Bank of Canada,concerned about unusually rapid increases in the money supply,refuses to make loans to commercial banks. 
A)  depositors,spurred by news or rumours of the possible bankruptcy of multiple banks,rush to withdraw deposits from the banking system. 
B)  depositors,spurred by news or rumours of the possible bankruptcy of a particular bank,rush to withdraw deposits from that bank. 
C)  commercial banks,concerned about high interest rates,rush to borrow from the overnight market. 
D)  depositors,afraid of increasing interest rates,attempt to engage in borrowing from the Bank of Canada. 
E)  the Bank of Canada,concerned about unusually rapid increases in the money supply,refuses to make loans to commercial banks.

Question 5

In Macroland,currency held by the public is 2000 econs,bank reserves are 300 econs,and the desired reserve-deposit ratio is 10%.If the central bank prints an additional 200 econs and uses this new currency to buy government bonds from the public,the money supply in Macroland will increase from ________ econs to _________ econs,assuming that the public does not wish to change the amount of currency it holds.

Accepted Answer

A)  2,000;2,200 
B)  2,300;2,500 
C)  3,000;5,000 
D)  5,000;7,000 
E)  5,300;7,500 
A)  2,000;2,200 
B)  2,300;2,500 
C)  3,000;5,000 
D)  5,000;7,000 
E)  5,300;7,500

Question 6

Besides the conduct of monetary policy,the Bank of Canada also performs all of the following functions EXCEPT

Accepted Answer

A)  providing clearing and settlement services for day-to-day transactions among commercial banks. 
B)  issuing bank notes. 
C)  administering the federal debt. 
D)  managing the federal government's bank accounts. 
E)  providing personal banking services to Canadians. 
A)  providing clearing and settlement services for day-to-day transactions among commercial banks. 
B)  issuing bank notes. 
C)  administering the federal debt. 
D)  managing the federal government's bank accounts. 
E)  providing personal banking services to Canadians.

Question 7

The desired reserve-deposit ratio is equal

Accepted Answer

A)  10% of bank reserves. 
B)  10% of bank deposits. 
C)  100% of bank reserves. 
D)  bank reserves divided by bank deposits. 
E)  bank deposits divided by bank reserves. 
A)  10% of bank reserves. 
B)  10% of bank deposits. 
C)  100% of bank reserves. 
D)  bank reserves divided by bank deposits. 
E)  bank deposits divided by bank reserves.

Question 8

If the public switches from doing most of its shopping with currency to using cheques instead,and the Bank of Canada takes no action,the money supply will

Accepted Answer

A)  increase. 
B)  decrease. 
C)  not change. 
D)  either increase or decrease. 
E)  equal the quantity of currency that is still in usE. 
A)  increase. 
B)  decrease. 
C)  not change. 
D)  either increase or decrease. 
E)  equal the quantity of currency that is still in usE.

Question 9

The money supply in Econland is 1,000,and currency held by the public is equal to bank reserves.The desired reserve-deposit ratio is 25%.Bank reserves equal

Accepted Answer

A)  200. 
B)  250. 
C)  400. 
D)  800. 
E)  1,000. 
A)  200. 
B)  250. 
C)  400. 
D)  800. 
E)  1,000.

Question 10

In a fractional-reserve banking system,the reserve-deposit ratio is

Accepted Answer

A)  equal to the currency in bank vaults. 
B)  equal to the currency held by the public divided by deposits. 
C)  equal to 100%. 
D)  less than 100%. 
E)  more than 100%. 
A)  equal to the currency in bank vaults. 
B)  equal to the currency held by the public divided by deposits. 
C)  equal to 100%. 
D)  less than 100%. 
E)  more than 100%.

Question 11

What function is money serving when you buy a ticket to a movie?

Accepted Answer

A)  A store of value. 
B)  A unit of account. 
C)  A transaction demand. 
D)  A medium of exchange. 
E)  Legal tender. 
A)  A store of value. 
B)  A unit of account. 
C)  A transaction demand. 
D)  A medium of exchange. 
E)  Legal tender.

Question 12

Money serves as a medium of exchange when

Accepted Answer

A)  it is used to purchase goods and services. 
B)  there is direct trade of goods and services. 
C)  it is a basic measure of economic value. 
D)  it is a means of holding wealth. 
E)  there is a double coincidence of wants. 
A)  it is used to purchase goods and services. 
B)  there is direct trade of goods and services. 
C)  it is a basic measure of economic value. 
D)  it is a means of holding wealth. 
E)  there is a double coincidence of wants.

Question 13

For all countries suffering hyperinflations,during the period of hyperinflation they experienced extremely high rates of growth of their

Accepted Answer

A)  GDP. 
B)  consumption. 
C)  money supply. 
D)  investment. 
E)  net exports. 
A)  GDP. 
B)  consumption. 
C)  money supply. 
D)  investment. 
E)  net exports.

Question 14

Based on the following information,calculate the value of the M1 measure of the money supply.

Accepted Answer

A)  $20 billion. 
B)  $50 billion. 
C)  $150 billion. 
D)  $450 billion. 
E)  $630 billion. 
A)  $20 billion. 
B)  $50 billion. 
C)  $150 billion. 
D)  $450 billion. 
E)  $630 billion.

Question 15

The money supply is 2000,of which 500 is currency held by the public.Bank reserves are 150.The desired reserve-deposit ratio equals

Accepted Answer

A)  5%. 
B)  10%. 
C)  15%. 
D)  20%. 
E)  25%. 
A)  5%. 
B)  10%. 
C)  15%. 
D)  20%. 
E)  25%.

Question 16

The money supply in Macroland is currently 2,500,bank reserves are 400,currency held by the public is 500,and the banks' desired reserve-deposit ratio is 20%.Assuming that the values of currency held by the public and the desired reserve-deposit ratio do not change,if the Central Bank of Macroland wishes to increase the money supply to 3,000,then it should conduct an open-market _________ government bonds to/from the public.

Accepted Answer

A)  purchase of 100 
B)  purchase of 250 
C)  purchase of 500 
D)  sale of 100 
E)  sale of 500 
A)  purchase of 100 
B)  purchase of 250 
C)  purchase of 500 
D)  sale of 100 
E)  sale of 500

Question 17

When the actual reserve-deposit ratio is less than the desired reserve-deposit ratio,banks will

Accepted Answer

A)  do nothing because this is a profitable situation. 
B)  stop making loans. 
C)  send the extra reserves to the central bank. 
D)  request that customers withdraw deposits from the bank. 
E)  make more loans in order to earn interest. 
A)  do nothing because this is a profitable situation. 
B)  stop making loans. 
C)  send the extra reserves to the central bank. 
D)  request that customers withdraw deposits from the bank. 
E)  make more loans in order to earn interest.

Question 18

The term seigniorage refers to the

Accepted Answer

A)  governance structure of the Bank of Canada. 
B)  hierarchal relationship between the Department of Finance and the Bank of Canada. 
C)  Bank of Canada's open-market purchases or sales. 
D)  profit gained from the issue of paper money or coins. 
E)  difference between the key policy rate and the overnight rate target. 
A)  governance structure of the Bank of Canada. 
B)  hierarchal relationship between the Department of Finance and the Bank of Canada. 
C)  Bank of Canada's open-market purchases or sales. 
D)  profit gained from the issue of paper money or coins. 
E)  difference between the key policy rate and the overnight rate target.

Question 19

The eases with which an asset can be converted into cash is called

Accepted Answer

A)  cashability. 
B)  velocity of money. 
C)  open-market operations. 
D)  liquidity. 
E)  store of valuE. 
A)  cashability. 
B)  velocity of money. 
C)  open-market operations. 
D)  liquidity. 
E)  store of valuE.

Question 20

When money is used as a means to hold wealth,it serves as a

Accepted Answer

A)  financial intermediary. 
B)  double coincidence of wants. 
C)  store of value. 
D)  medium of exchange. 
E)  unit of account. 
A)  financial intermediary. 
B)  double coincidence of wants. 
C)  store of value. 
D)  medium of exchange. 
E)  unit of account.

If the reserve-deposit ratio is 5% and the banking system receives an additional $10 million in reserves,bank deposits will increase by

The M2 measure of money consists of the sum of

Monetary policy changes in Canada typically involve changes to

A bank run is an episode in which

Besides the conduct of monetary policy,the Bank of Canada also performs all of the following functions EXCEPT

The desired reserve-deposit ratio is equal

If the public switches from doing most of its shopping with currency to using cheques instead,and the Bank of Canada takes no action,the money supply will

The money supply in Econland is 1,000,and currency held by the public is equal to bank reserves.The desired reserve-deposit ratio is 25%.Bank reserves equal

In a fractional-reserve banking system,the reserve-deposit ratio is

What function is money serving when you buy a ticket to a movie?

Money serves as a medium of exchange when

For all countries suffering hyperinflations,during the period of hyperinflation they experienced extremely high rates of growth of their

Based on the following information,calculate the value of the M1 measure of the money supply.

The money supply is 2000,of which 500 is currency held by the public.Bank reserves are 150.The desired reserve-deposit ratio equals

When the actual reserve-deposit ratio is less than the desired reserve-deposit ratio,banks will

The term seigniorage refers to the

The eases with which an asset can be converted into cash is called

When money is used as a means to hold wealth,it serves as a

Measuring Macroeconomic Performance: Output and Prices

Measuring Macroeconomic Performance: Saving and Wealth

Measuring Macroeconomic Performance: Wages, Employment and the Labour Market

Short-Term Economic Fluctuations

Spending and Output in the Short Run

Fiscal Policy

Money, Prices and the Reserve Bank

The Reserve Bank and the Economy

Macroeconomic Policy

The Economy in the Long Run: an Introduction to Economic Growth

The Production Function Approach to Understanding Growth

Savings, Capital Formation and Comparative Economic Growth

International Trade

Exchange Rates and the Open Economy

The Balance of Payments: Net Exports and International Capital Flows

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Exam 9: The Aggregate Demand - Aggregate Supply Model

If the reserve-deposit ratio is 5% and the banking system receives an additional $10 million in reserves,bank deposits will increase by

The M2 measure of money consists of the sum of

Monetary policy changes in Canada typically involve changes to

A bank run is an episode in which

Besides the conduct of monetary policy,the Bank of Canada also performs all of the following functions EXCEPT

The desired reserve-deposit ratio is equal

If the public switches from doing most of its shopping with currency to using cheques instead,and the Bank of Canada takes no action,the money supply will

The money supply in Econland is 1,000,and currency held by the public is equal to bank reserves.The desired reserve-deposit ratio is 25%.Bank reserves equal

In a fractional-reserve banking system,the reserve-deposit ratio is

What function is money serving when you buy a ticket to a movie?

Money serves as a medium of exchange when

For all countries suffering hyperinflations,during the period of hyperinflation they experienced extremely high rates of growth of their

Based on the following information,calculate the value of the M1 measure of the money supply.

The money supply is 2000,of which 500 is currency held by the public.Bank reserves are 150.The desired reserve-deposit ratio equals

When the actual reserve-deposit ratio is less than the desired reserve-deposit ratio,banks will

The term seigniorage refers to the

The eases with which an asset can be converted into cash is called

When money is used as a means to hold wealth,it serves as a

Measuring Macroeconomic Performance: Output and Prices

Measuring Macroeconomic Performance: Saving and Wealth

Measuring Macroeconomic Performance: Wages, Employment and the Labour Market

Short-Term Economic Fluctuations

Spending and Output in the Short Run

Fiscal Policy

Money, Prices and the Reserve Bank

The Reserve Bank and the Economy

Macroeconomic Policy

The Economy in the Long Run: an Introduction to Economic Growth

The Production Function Approach to Understanding Growth

Savings, Capital Formation and Comparative Economic Growth

International Trade

Exchange Rates and the Open Economy

The Balance of Payments: Net Exports and International Capital Flows

Filters