Question 1

Which statement best characterizes credit cards?

Accepted Answer

A)  They are a payment form of money. 
B)  They are part of the M1+ money supply. 
C)  They are a method of deferring payment. 
D)  They are a unit of account. 
A)  They are a payment form of money. 
B)  They are part of the M1+ money supply. 
C)  They are a method of deferring payment. 
D)  They are a unit of account.

Question 2

Banks could not change the money supply if they were required to hold all deposits in reserve.

Accepted Answer

A) True 
 B)False

Question 3

Which statement best defines barter?

Accepted Answer

A)  It is an exchange of goods for money. 
B)  It is an exchange of money for foreign currency. 
C)  It is a generally accepted legal tender. 
D)  It is a transaction that requires a double coincidence of wants. 
A)  It is an exchange of goods for money. 
B)  It is an exchange of money for foreign currency. 
C)  It is a generally accepted legal tender. 
D)  It is a transaction that requires a double coincidence of wants.

Question 4

Who owns the Bank of Canada?

Accepted Answer

A)  private individuals 
B)  the Queen 
C)  the chartered banks 
D)  the federal government of Canada 
A)  private individuals 
B)  the Queen 
C)  the chartered banks 
D)  the federal government of Canada

Question 5

M2 is both larger and more liquid than M1+.

Accepted Answer

A) True 
 B)False

Question 6

In an economy that relies on barter,trade requires a double coincidence of wants.

Accepted Answer

A) True 
 B)False

Question 7

Table 10-3
The following information pertains to the Bank of Kamloops.  
-Refer to the Table 10-3.Assume that the Bank of Kamloops is holding the required percent of deposits as reserves.Also,assume all other banks hold only the required percent of deposits as reserves,and that people hold only deposits and no currency.What is the money multiplier?

Accepted Answer

A)  1 
B)  5 
C)  10 
D)  15 
A)  1 
B)  5 
C)  10 
D)  15

Question 8

What is a debit card?

Accepted Answer

A)  a form of money 
B)  a means of payment 
C)  a form of investment 
D)  a means of borrowing 
A)  a form of money 
B)  a means of payment 
C)  a form of investment 
D)  a means of borrowing

Question 9

If the reserve ratio is 20 percent,how much new money can $1000 of excess reserves create?

Accepted Answer

A)  $500 
B)  $5000 
C)  $50,000 
D)  $500,000 
A)  $500 
B)  $5000 
C)  $50,000 
D)  $500,000

Question 10

Which list contains only actions that decrease the money supply?

Accepted Answer

A)  making open-market purchases; raising the reserve requirement ratio 
B)  making open-market purchases; lowering the reserve requirement ratio 
C)  making open-market sales; raising the reserve requirement ratio 
D)  making open-market sales; lowering the reserve requirement ratio 
A)  making open-market purchases; raising the reserve requirement ratio 
B)  making open-market purchases; lowering the reserve requirement ratio 
C)  making open-market sales; raising the reserve requirement ratio 
D)  making open-market sales; lowering the reserve requirement ratio

Question 11

If the central bank lowered the reserve requirement,what happens to the money multiplier and the money supply?

Accepted Answer

A)  The money multiplier increases,but the money supply decreases. 
B)  The money multiplier decreases,but the money supply increases. 
C)  The money multiplier and the money supply both increase. 
D)  The money multiplier and the money supply both decrease. 
A)  The money multiplier increases,but the money supply decreases. 
B)  The money multiplier decreases,but the money supply increases. 
C)  The money multiplier and the money supply both increase. 
D)  The money multiplier and the money supply both decrease.

Question 12

A central bank raised the reserve requirement ratio from 8 percent to 10 percent.Other things the same,how does the money multiplier change?

Accepted Answer

A)  It increases by 2. 
B)  It decreases by 2. 
C)  It increases by 2.5 
D)  It decreases by 2.5 
A)  It increases by 2. 
B)  It decreases by 2. 
C)  It increases by 2.5 
D)  It decreases by 2.5

Question 13

Credit cards are not a medium of exchange and so are not important for analyzing the monetary system.

Accepted Answer

A) True 
 B)False

Question 14

Which of the three functions of money are met by each of the following assets in the Canadian economy?
a.paper dollar
b.precious metals
c.collectibles such as baseball cards,stamps,and antiques

Accepted Answer

a.medium of exchange

Question 15

Suppose a bank uses $200 of its $500 excess reserves to make a new loan when the reserve ratio is 20 percent.How does this action by itself initially change the money supply?

Accepted Answer

A)  The money supply increases by $40. 
B)  The money supply decreases by $40. 
C)  The money supply increases by $200. 
D)  The money supply decreases by $200. 
A)  The money supply increases by $40. 
B)  The money supply decreases by $40. 
C)  The money supply increases by $200. 
D)  The money supply decreases by $200.

Question 16

What is a credit card?

Accepted Answer

A)  a form of money 
B)  a form of saving 
C)  a form of investing 
D)  a form of payment 
A)  a form of money 
B)  a form of saving 
C)  a form of investing 
D)  a form of payment

Question 17

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

Accepted Answer

A)  bank rate changes; open-market transactions; reserve requirement changes 
B)  bank rate changes; reserve requirement changes; open-market transactions 
C)  open-market transactions; bank rate changes; reserve requirement changes 
D)  open-market transactions; reserve requirement changes; bank rate changes 
A)  bank rate changes; open-market transactions; reserve requirement changes 
B)  bank rate changes; reserve requirement changes; open-market transactions 
C)  open-market transactions; bank rate changes; reserve requirement changes 
D)  open-market transactions; reserve requirement changes; bank rate changes

Question 18

How does M1 compare with M2?

Accepted Answer

A)  M1+ is smaller and less liquid than M2. 
B)  M1+ is smaller but more liquid than M2. 
C)  M1+ is larger than and less liquid than M2. 
D)  M1+ is larger than but more liquid than M2. 
A)  M1+ is smaller and less liquid than M2. 
B)  M1+ is smaller but more liquid than M2. 
C)  M1+ is larger than and less liquid than M2. 
D)  M1+ is larger than but more liquid than M2.

Question 19

To increase the money supply,what could the Bank of Canada do?

Accepted Answer

A)  sell government bonds 
B)  increase the bank rate 
C)  decrease the reserve requirement 
D)  decrease the money multiplier 
A)  sell government bonds 
B)  increase the bank rate 
C)  decrease the reserve requirement 
D)  decrease the money multiplier

Question 20

Which statement best explains the role of the Canadian Deposit Insurance Corporation (CDIC)?

Accepted Answer

A)  The CDIC protects depositors in the event of bank failures. 
B)  The CDIC protects commercial banks in the event of mortgage defaults 
C)  The CDIC determines the bank rate. 
D)  The CDIC determines the reserve requirement. 
A)  The CDIC protects depositors in the event of bank failures. 
B)  The CDIC protects commercial banks in the event of mortgage defaults 
C)  The CDIC determines the bank rate. 
D)  The CDIC determines the reserve requirement.

Which statement best characterizes credit cards?

Banks could not change the money supply if they were required to hold all deposits in reserve.

Which statement best defines barter?

Who owns the Bank of Canada?

M2 is both larger and more liquid than M1+.

In an economy that relies on barter,trade requires a double coincidence of wants.

What is a debit card?

If the reserve ratio is 20 percent,how much new money can $1000 of excess reserves create?

Which list contains only actions that decrease the money supply?

If the central bank lowered the reserve requirement,what happens to the money multiplier and the money supply?

A central bank raised the reserve requirement ratio from 8 percent to 10 percent.Other things the same,how does the money multiplier change?

Credit cards are not a medium of exchange and so are not important for analyzing the monetary system.

Which of the three functions of money are met by each of the following assets in the Canadian economy? a.paper dollar b.precious metals c.collectibles such as baseball cards,stamps,and antiques

Suppose a bank uses $200 of its $500 excess reserves to make a new loan when the reserve ratio is 20 percent.How does this action by itself initially change the money supply?

What is a credit card?

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

How does M1 compare with M2?

To increase the money supply,what could the Bank of Canada do?

Which statement best explains the role of the Canadian Deposit Insurance Corporation (CDIC)?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, investment, and the Financial System

Unemployment and Its Natural Rate

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Small Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

Filters

Exam 10: The Monetary System

Which statement best characterizes credit cards?

Banks could not change the money supply if they were required to hold all deposits in reserve.

Which statement best defines barter?

Who owns the Bank of Canada?

M2 is both larger and more liquid than M1+.

In an economy that relies on barter,trade requires a double coincidence of wants.

What is a debit card?

If the reserve ratio is 20 percent,how much new money can $1000 of excess reserves create?

Which list contains only actions that decrease the money supply?

If the central bank lowered the reserve requirement,what happens to the money multiplier and the money supply?

A central bank raised the reserve requirement ratio from 8 percent to 10 percent.Other things the same,how does the money multiplier change?

Credit cards are not a medium of exchange and so are not important for analyzing the monetary system.

Which of the three functions of money are met by each of the following assets in the Canadian economy? a.paper dollar b.precious metals c.collectibles such as baseball cards,stamps,and antiques

Suppose a bank uses $200 of its $500 excess reserves to make a new loan when the reserve ratio is 20 percent.How does this action by itself initially change the money supply?

What is a credit card?

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

How does M1 compare with M2?

To increase the money supply,what could the Bank of Canada do?

Which statement best explains the role of the Canadian Deposit Insurance Corporation (CDIC)?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, investment, and the Financial System

Unemployment and Its Natural Rate

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Small Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

Filters