 |
1 | |
Which of the following is not one of the main functions of money? It serves as: |
| | A) | a means of exchange. |
| | B) | a measure of value. |
| | C) | a store of purchasing power. |
| | D) | a high-return financial investment. |
| | E) | a method of barter |
|
|
2 | |
Which of the following is considered a near bank? |
| | A) | a chartered bank |
| | B) | a trust company |
| | C) | an insurance company |
| | D) | an investment dealer |
| | E) | a mutual fund company |
|
|
3 | |
Which of the following deposit-takers is a nonprofit institution? |
| | A) | an insurance company |
| | B) | a trust company |
| | C) | a credit union |
| | D) | a mortgage loan company |
| | E) | a chartered bank |
|
|
4 | |
Traditionally, the four pillars of the Canadian financial system were: |
| | A) | chartered banks, insurance companies, credit unions, and investment dealers. |
| | B) | chartered banks, trust companies, insurance companies, and investment dealers. |
| | C) | chartered banks, insurance companies, credit unions, and mortgage loan companies. |
| | D) | chartered banks, credit unions, mortgage loan companies, and investment dealers. |
| | E) | chartered banks, trust companies, mortgage loan companies, and credit unions. |
|
|
5 | |
M1 is defined as: |
| | A) | currency outside chartered banks plus publicly held demand deposits at chartered banks. |
| | B) | all currency plus publicly held demand deposits at chartered banks. |
| | C) | all currency plus all demand deposits at all deposit-taking institutions. |
| | D) | currency outside near banks plus all deposits at chartered banks. |
| | E) | currency outside near banks plus all deposits and chartered banks and near banks. |
|
|
6 | |
M2 is defined as: |
| | A) | currency outside chartered banks plus personal term deposits at all deposit-taking institutions. |
| | B) | currency outside chartered banks plus notice deposits at all deposit-taking institutions. |
| | C) | M1 plus notice deposits at chartered banks. |
| | D) | M1 plus notice and personal term deposits at chartered banks. |
| | E) | currency outside near banks plus all deposits at chartered banks and near banks. |
|
|
7 | |
Which of the following money definitions includes foreign currency chartered banks? |
| | A) | M1 |
| | B) | M2 |
| | C) | M3 |
| | D) | M2+ |
| | E) | none of the above |
|
|
8 | |
The greater use of credit cards: |
| | A) | is making M2 and M2+ more accurate measures of the money supply. |
| | B) | is increasing the importance of chartered bank demand deposits. |
| | C) | is making it more essential that credit card balances be included in money supply definitions. |
| | D) | is likely to gradually die out with the introduction of debit cards. |
| | E) | is increasing the importance of cash. |
|
|
9 | |
The transactions demand for money will increase if: |
| | A) | the economy's real output declines. |
| | B) | the economy's real output rises. |
| | C) | the price level falls. |
| | D) | interest rates rise. |
| | E) | interest rates fall. |
|
|
10 | |
The asset demand for money will decrease if: |
| | A) | the economy's real output declines. |
| | B) | the economy's real output rises. |
| | C) | the price level falls. |
| | D) | interest rates rise. |
| | E) | interest rates fall. |
|
|
11 | |
An increase in the money supply causes: |
| | A) | an initial surplus in the money market, followed by a fall in the equilibrium interest rate. |
| | B) | an initial surplus in the money market, followed by a rise in the equilibrium interest rate. |
| | C) | an initial shortage in the money market, followed by a fall in the equilibrium interest rate. |
| | D) | an initial shortage in the money market, followed by a rise in the equilibrium interest rate. |
| | E) | no change in the equilibrium interest rate. |
|
|
12 | |
A bank with a reserve ratio of 10% and cash reserves of $5 million has $100 million in outstanding deposits. Therefore the bank's excess reserves are: |
| | A) | impossible to calculate without knowing the bank's desired reserves. |
| | B) | -$5 million. |
| | C) | zero, since cash reserves are less than desired reserves. |
| | D) | $5 million. |
| | E) | $10 million |
|
|
13 | |
If $100 in currency sitting in a cookie jar is deposited in a bank, the maximum amount of new money the banking system can create from this deposit is: |
| | A) | $100 if the reserve ratio is 5%. |
| | B) | $2000 if the reserve ratio is 5%. |
| | C) | $1900 if the reserve ratio is 5%. |
| | D) | $95 if the reserve ratio is 5%. |
| | E) | $5000 if the reserve ratio is 5%. |
|
|
14 | |
In the staples thesis of Harold Innis, Canada's early economic development was driven: |
| | A) | first by fish, then by furs, lumber, and wheat. |
| | B) | first by furs, then by fish, lumber, and minerals. |
| | C) | first by lumber, then by fish, furs, and minerals. |
| | D) | first by fish, then by furs, lumber, and minerals. |
| | E) | first by furs, then by lumber, fish, and minerals. |
|
|
15 | |
According to Gresham's Law: |
| | A) | paper currency is the most practical form of money. |
| | B) | the techniques of clipping and hollowing will always be used by dishonest individuals if money is in the form of coins. |
| | C) | governments can make a profit by issuing coins, but not by issuing paper currency. |
| | D) | cheap money always drives dear money out of circulation. |
| | E) | governments can make a profit by issuing paper currency, but not by issuing coins. |
|
2002 McGraw-Hill Higher Education