Question 1

Banks could not create money if

Accepted Answer

A)  the required reserve ratio was zero. 
B)  the Bank of Canada stopped selling bonds. 
C)  people held no money as cash. 
D)  people held all their money as cash. 
E)  people stopped using bank machines. 
A)  the required reserve ratio was zero. 
B)  the Bank of Canada stopped selling bonds. 
C)  people held no money as cash. 
D)  people held all their money as cash. 
E)  people stopped using bank machines.

Question 2

There is $5,000,000 of currency in Econland,all held by banks as reserves.The public does not hold any currency.If the banks' desired reserve-deposit ratio is 20%,then the money supply equals

Accepted Answer

A)  $5,000,000. 
B)  $6,000,000. 
C)  $10,000,000. 
D)  $20,000,000. 
E)  $25,000,000. 
A)  $5,000,000. 
B)  $6,000,000. 
C)  $10,000,000. 
D)  $20,000,000. 
E)  $25,000,000.

Question 3

The M2 measure of money consists of the sum of

Accepted Answer

A)  savings deposits,and money market mutual funds. 
B)  currency,demand and savings deposits,and small time deposits. 
C)  currency,demand and savings deposits. 
D)  M1,personal savings deposits,and non-personal time deposits. 
E)  M1,savings deposits,and money market mutual funds. 
A)  savings deposits,and money market mutual funds. 
B)  currency,demand and savings deposits,and small time deposits. 
C)  currency,demand and savings deposits. 
D)  M1,personal savings deposits,and non-personal time deposits. 
E)  M1,savings deposits,and money market mutual funds.

Question 4

A banking panic 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)  commercial banks,fearing Bank of Canada sanctions,unwillingly participate in open-market operations. 
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)  commercial banks,fearing Bank of Canada sanctions,unwillingly participate in open-market operations. 
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

If banks' desired reserve ratio increases from 10% to 15%,the public still desires to hold the same amount of currency,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 6

In response to the persistence of recessionary gaps,some central banks have engaged in unconventional monetary policies such as

Accepted Answer

A)  increasing deposit insurance. 
B)  reducing the velocity of money. 
C)  increasing open-market operations. 
D)  credit easing. 
E)  fractional-reserve banking. 
A)  increasing deposit insurance. 
B)  reducing the velocity of money. 
C)  increasing open-market operations. 
D)  credit easing. 
E)  fractional-reserve banking.

Question 7

Under the policy of quantitative easing,the central bank _______________ in order to reduce interest rate spreads in credit markets during a financial panic.

Accepted Answer

A)  creates central bank reserves for the purchase of financial assets 
B)  reduces central bank reserves by selling financial assets 
C)  purchases private-sector financial assets 
D)  purchases government bonds 
E)  prints more money. 
A)  creates central bank reserves for the purchase of financial assets 
B)  reduces central bank reserves by selling financial assets 
C)  purchases private-sector financial assets 
D)  purchases government bonds 
E)  prints more money.

Question 8

Under the policy of credit easing,the central bank _______________ in order to reduce interest rate spreads in credit markets during a financial panic.

Accepted Answer

A)  creates central bank reserves for the purchase of financial assets 
B)  reduces central bank reserves by selling financial assets 
C)  purchases private-sector financial assets 
D)  purchases government bonds 
E)  prints more money. 
A)  creates central bank reserves for the purchase of financial assets 
B)  reduces central bank reserves by selling financial assets 
C)  purchases private-sector financial assets 
D)  purchases government bonds 
E)  prints more money.

Question 9

In Econland,all $5,000,000 in currency is held by banks as reserves.The public does not hold any currency.If the banks' desired reserve-deposit ratio is 10%,the money supply in Econland equals

Accepted Answer

A)  $4,545,545. 
B)  $5,000,000. 
C)  $5,500,000. 
D)  $50,000,000. 
E)  $55,000,000. 
A)  $4,545,545. 
B)  $5,000,000. 
C)  $5,500,000. 
D)  $50,000,000. 
E)  $55,000,000.

Question 10

If the reserve-deposit ratio is 25% and the banking system receives an additional $10 million in reserves,bank deposits will increase by

Accepted Answer

A)  $10 million. 
B)  $250 million. 
C)  $400 million. 
D)  $4 million. 
E)  $40 million. 
A)  $10 million. 
B)  $250 million. 
C)  $400 million. 
D)  $4 million. 
E)  $40 million.

Question 11

In Macroland,there is $1,000,000 in currency that can either be held by the public or used by banks as reserves.If the banks' desired reserve-deposit ratio increases from 10% to 15% and the public continues to hold the same amount of currency,the money supply in Macroland will

Accepted Answer

A)  increase. 
B)  decrease. 
C)  remain the same. 
D)  either increase or decrease. 
E)  increase initially,but then return to the original level. 
A)  increase. 
B)  decrease. 
C)  remain the same. 
D)  either increase or decrease. 
E)  increase initially,but then return to the original level.

Question 12

If governments ________ to pay their bills,rather than ________ or ________,the result can be hyperinflation.

Accepted Answer

A)  raise taxes;printing money;selling bonds 
B)  sell bonds;printing money;raising taxes 
C)  print money;raising taxes;selling bonds 
D)  sell their assets;raising taxes;printing money 
E)  increase interest rates;raising taxes;selling bonds 
A)  raise taxes;printing money;selling bonds 
B)  sell bonds;printing money;raising taxes 
C)  print money;raising taxes;selling bonds 
D)  sell their assets;raising taxes;printing money 
E)  increase interest rates;raising taxes;selling bonds

Question 13

If hyperinflation is defined as annual inflation exceeding ________,then at least ________ countries have suffered hyperinflations since the early 1980s.

Accepted Answer

A)  2%;150 
B)  10%;100 
C)  50%;100 
D)  100%;5 
E)  1,000%;25 
A)  2%;150 
B)  10%;100 
C)  50%;100 
D)  100%;5 
E)  1,000%;25

Question 14

When the central bank sells $5,000,000 worth of government bonds to the public,the money supply

Accepted Answer

A)  decreases by more than $5,000,000. 
B)  decreases by $5,000,000. 
C)  decreases by less than $5,000,000. 
D)  does not change. 
E)  increases by $5,000,000. 
A)  decreases by more than $5,000,000. 
B)  decreases by $5,000,000. 
C)  decreases by less than $5,000,000. 
D)  does not change. 
E)  increases by $5,000,000.

Question 15

Functions of the Bank of Canada include all of the following EXCEPT

Accepted Answer

A)  setting the key policy rate. 
B)  issuing bank notes. 
C)  maintaining the stability of the financial system. 
D)  overseeing clearing and settlement systems. 
E)  providing banking services to the public. 
A)  setting the key policy rate. 
B)  issuing bank notes. 
C)  maintaining the stability of the financial system. 
D)  overseeing clearing and settlement systems. 
E)  providing banking services to the public.

Question 16

The money supply is 1,500,of which 500 is currency held by the public.Bank reserves are 200.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 17

The profit gained by the Bank of Canada through the issuing of paper money and coins is called

Accepted Answer

A)  currency. 
B)  quantitative easing. 
C)  credit easing. 
D)  deposit insurance. 
E)  seignioragE. 
A)  currency. 
B)  quantitative easing. 
C)  credit easing. 
D)  deposit insurance. 
E)  seignioragE.

Question 18

Cash and similar assets held to meet depositor withdrawals or payments are called

Accepted Answer

A)  deposits. 
B)  bank reserves. 
C)  chequing accounts. 
D)  money. 
E)  bank liabilities. 
A)  deposits. 
B)  bank reserves. 
C)  chequing accounts. 
D)  money. 
E)  bank liabilities.

Question 19

The unique contribution of the Bank of Canada in maintaining the stability of the financial system stems from it capacity to

Accepted Answer

A)  provide deposit insurance. 
B)  conduct fiscal policy. 
C)  function as a lender of last resort. 
D)  make loans directly to the public. 
E)  pass banking legislation without government approval. 
A)  provide deposit insurance. 
B)  conduct fiscal policy. 
C)  function as a lender of last resort. 
D)  make loans directly to the public. 
E)  pass banking legislation without government approval.

Question 20

If the reserve-deposit ratio is 10% 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)  $100 million. 
E)  $250 million. 
A)  $4 million. 
B)  $10 million. 
C)  $40 million. 
D)  $100 million. 
E)  $250 million.

Banks could not create money if

There is $5,000,000 of currency in Econland,all held by banks as reserves.The public does not hold any currency.If the banks' desired reserve-deposit ratio is 20%,then the money supply equals

The M2 measure of money consists of the sum of

A banking panic is an episode in which

If banks' desired reserve ratio increases from 10% to 15%,the public still desires to hold the same amount of currency,and the Bank of Canada takes no action,the money supply will

In response to the persistence of recessionary gaps,some central banks have engaged in unconventional monetary policies such as

Under the policy of quantitative easing,the central bank _______________ in order to reduce interest rate spreads in credit markets during a financial panic.

Under the policy of credit easing,the central bank _______________ in order to reduce interest rate spreads in credit markets during a financial panic.

In Econland,all $5,000,000 in currency is held by banks as reserves.The public does not hold any currency.If the banks' desired reserve-deposit ratio is 10%,the money supply in Econland equals

If the reserve-deposit ratio is 25% and the banking system receives an additional $10 million in reserves,bank deposits will increase by

In Macroland,there is $1,000,000 in currency that can either be held by the public or used by banks as reserves.If the banks' desired reserve-deposit ratio increases from 10% to 15% and the public continues to hold the same amount of currency,the money supply in Macroland will

If governments to pay their bills,rather than or ,the result can be hyperinflation.

If hyperinflation is defined as annual inflation exceeding ,then at least countries have suffered hyperinflations since the early 1980s.

When the central bank sells $5,000,000 worth of government bonds to the public,the money supply

Functions of the Bank of Canada include all of the following EXCEPT

The money supply is 1,500,of which 500 is currency held by the public.Bank reserves are 200.The desired reserve-deposit ratio equals

The profit gained by the Bank of Canada through the issuing of paper money and coins is called

Cash and similar assets held to meet depositor withdrawals or payments are called

The unique contribution of the Bank of Canada in maintaining the stability of the financial system stems from it capacity to

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

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

Exam 9: The Aggregate Demand - Aggregate Supply Model

Banks could not create money if

There is $5,000,000 of currency in Econland,all held by banks as reserves.The public does not hold any currency.If the banks' desired reserve-deposit ratio is 20%,then the money supply equals

The M2 measure of money consists of the sum of

A banking panic is an episode in which

If banks' desired reserve ratio increases from 10% to 15%,the public still desires to hold the same amount of currency,and the Bank of Canada takes no action,the money supply will

In response to the persistence of recessionary gaps,some central banks have engaged in unconventional monetary policies such as

Under the policy of quantitative easing,the central bank _______________ in order to reduce interest rate spreads in credit markets during a financial panic.

Under the policy of credit easing,the central bank _______________ in order to reduce interest rate spreads in credit markets during a financial panic.

In Econland,all $5,000,000 in currency is held by banks as reserves.The public does not hold any currency.If the banks' desired reserve-deposit ratio is 10%,the money supply in Econland equals

If the reserve-deposit ratio is 25% and the banking system receives an additional $10 million in reserves,bank deposits will increase by

In Macroland,there is $1,000,000 in currency that can either be held by the public or used by banks as reserves.If the banks' desired reserve-deposit ratio increases from 10% to 15% and the public continues to hold the same amount of currency,the money supply in Macroland will

If governments ________ to pay their bills,rather than ________ or ________,the result can be hyperinflation.

If hyperinflation is defined as annual inflation exceeding ________,then at least ________ countries have suffered hyperinflations since the early 1980s.

When the central bank sells $5,000,000 worth of government bonds to the public,the money supply

Functions of the Bank of Canada include all of the following EXCEPT

The money supply is 1,500,of which 500 is currency held by the public.Bank reserves are 200.The desired reserve-deposit ratio equals

The profit gained by the Bank of Canada through the issuing of paper money and coins is called

Cash and similar assets held to meet depositor withdrawals or payments are called

The unique contribution of the Bank of Canada in maintaining the stability of the financial system stems from it capacity to

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

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

If governments to pay their bills,rather than or ,the result can be hyperinflation.

If hyperinflation is defined as annual inflation exceeding ,then at least countries have suffered hyperinflations since the early 1980s.