Question 1

Included in the M2 definition of money are chequable bank deposits.

Accepted Answer

A) True 
 B)False

Question 2

Money used to buy a ticket to a football game is functioning primarily as a:

Accepted Answer

A)   medium of exchange.
B)   store of value.
C)   unit of account.
D)   standard of deferred payment.E) A) and B)
F) None of the above

Question 3

Bank-like activities undertaken by depository financial institutions like commercial banks,with regulatory oversight and protection,are said to be operating as a shadow bank.

Accepted Answer

A) True 
 B)False

Question 4

Money that some authority,generally a government,has ordered to be accepted as a medium of exchange is called _____ money.

Accepted Answer

A)   fiat
B)   intrinsic
C)   bank-created
D)   debtE) B) and D)
F) None of the above

Question 5

When the Bank of Canada buys $250 million worth of Treasury bills from commercial banks,the banks' reserves increase by less than $250 million.

Accepted Answer

A) True 
 B)False

Question 6

Use the following to answer questions:
The reserve requirement is 10% and Jack withdraws $5000 travel money from his chequable deposit.Assume that banks do not hold any excess reserves and that the public holds no currency,only chequable bank deposits.
-(Scenario: Money Supply Changes) Refer to Scenario: Money Supply Changes.By how much must the bank's loans decrease as a result of the withdrawal?

Accepted Answer

A)   $5000
B)   $4500
C)   $500
D)   $0E) None of the above
F) C) and D)

Question 7

Shadow banking:

Accepted Answer

A)   doesn't look like traditional banking but serves similar purposes while posing significantly more risk.
B)   is another name for traditional banking.
C)   looks like traditional banking but serves different purposes and imposes significantly more risk.
D)   doesn't look like traditional banking but serves similar purposes while not posing any additional risk.E) B) and C)
F) C) and D)

Question 8

The banking sector lobbied against the issuing of paper notes by the government because the banks thought this would erode their right to print money.

Accepted Answer

A) True 
 B)False

Question 9

Suppose that initially a bank has excess reserves of $800 and the reserve ratio is 20%.Then Andy deposits $1 000 of cash in his chequing account and the bank lends $600 to Molly.That bank can lend an additional:

Accepted Answer

A)   $200.
B)   $1 000.
C)   $800.
D)   $2 400.E) All of the above
F) B) and D)

Question 10

Before the creation of the Bank of Canada,who was the official lender of last resort in Canada?

Accepted Answer

A)   the federal government
B)   the Treasury Board
C)   individual banks
D)   there was no lender of last resortE) B) and D)
F) A) and D)

Question 11

____________ is lending to homebuyers who don't meet the usual criteria for qualifying for a loan.

Accepted Answer

A)   Prime lending
B)   Prime investment lending
C)   Subprime lending
D)   Acceptance lendingE) B) and D)
F) A) and B)

Question 12

Since much of the financial crisis of 2008 originated in shadow banking,the United States passed the Wall Street Reform and Consumer Protection Act.This bill is better known as:

Accepted Answer

A)   the Dodd-Frank bill.
B)   Obama care.
C)   cash for clunkers.
D)   the Glass-Steagall act.E) A) and D)
F) A) and C)

Question 13

The Canadian economy recovered from the 2008 recession primarily because low interest rates caused a boom in the housing market.

Accepted Answer

A) True 
 B)False

Question 14

Use the following to answer questions:
Charlotte withdraws $8000 from her chequable bank deposit to pay tuition this semester.Assume that the reserve requirement is 20% and that banks do not hold excess reserves.
-(Scenario: Money Supply Changes II) Refer to Scenario: Money Supply Changes II.As a result of the withdrawal,required reserves:

Accepted Answer

A)   decrease by $1600.
B)   decrease by $6400.
C)   decrease by $8000.
D)   don't change.E) A) and B)
F) A) and C)

Question 15

The reserve ratio is the:

Accepted Answer

A)   bank's holdings of gold.
B)   government's holdings of gold at Fort Knox.
C)   fraction of deposits that banks hold in their vaults plus their deposits at the Bank of Canada.
D)   ratio of gold to the paper money in the economy.E) B) and D)
F) B) and C)

Question 16

The Canadian dollar in your pocket today is BEST described as:

Accepted Answer

A)   commodity money.
B)   near-money.
C)   fiat money.
D)   commodity-backed money.E) B) and C)
F) All of the above

Question 17

In a deposits-only monetary system with a 5% required reserve ratio,a bank deposit of $1000 could increase the total amount of bank deposits by up to:

Accepted Answer

A)   $5000.
B)   $10000.
C)   $20000.
D)   $50000.E) B) and C)
F) A) and B)

Question 18

The reserve ratio is the fraction of its:

Accepted Answer

A)   deposits that a bank holds as reserves.
B)   loans that a bank is required to hold as reserves.
C)   loans that a bank holds as reserves.
D)   assets that a bank is required to hold as reserves.E) B) and C)
F) A) and B)

Question 19

A reserve ratio is the:

Accepted Answer

A)   proportion of cash and security reserves the bank holds.
B)   fraction of deposits that the bank is required to hold as reserves.
C)   loan-to-deposit ratio in the bank's balance sheet.
D)   money belonging to the bank's largest depositors.E) A) and B)
F) A) and C)

Question 20

In securitization:

Accepted Answer

A)   securities are sold to investment bankers.
B)   loans are secured by special government insurance.
C)   a pool of loans is assembled and shares of that pool are sold to investors.
D)   individuals use assets to back their loans.E) C) and D)
F) A) and C)

Exam 14: Money, Banking, and the Federal Reserve System

The Canadian dollar in your pocket today is BEST described as:

Correct Answer
verified

Money that some authority,generally a government,has ordered to be accepted as a medium of exchange is called _____ money.

Correct Answer
verified

Before the creation of the Bank of Canada,who was the official lender of last resort in Canada?

Correct Answer
verified

Included in the M2 definition of money are chequable bank deposits.

Correct Answer
verified

In a deposits-only monetary system with a 5% required reserve ratio,a bank deposit of $1000 could increase the total amount of bank deposits by up to:

Correct Answer
verified

Suppose that initially a bank has excess reserves of $800 and the reserve ratio is 20%.Then Andy deposits $1 000 of cash in his chequing account and the bank lends $600 to Molly.That bank can lend an additional:

Correct Answer
verified

Bank-like activities undertaken by depository financial institutions like commercial banks,with regulatory oversight and protection,are said to be operating as a shadow bank.

Correct Answer
verified

Correct Answer
verified

When the Bank of Canada buys $250 million worth of Treasury bills from commercial banks,the banks' reserves increase by less than $250 million.

Correct Answer
verified

A reserve ratio is the:

Correct Answer
verified

In securitization:

Correct Answer
verified

The banking sector lobbied against the issuing of paper notes by the government because the banks thought this would erode their right to print money.

Correct Answer
verified

The reserve ratio is the fraction of its:

Correct Answer
verified

Money used to buy a ticket to a football game is functioning primarily as a:

Correct Answer
verified

The Canadian economy recovered from the 2008 recession primarily because low interest rates caused a boom in the housing market.

Correct Answer
verified

The reserve ratio is the:

Correct Answer
verified

Shadow banking:

Correct Answer
verified

____________ is lending to homebuyers who don't meet the usual criteria for qualifying for a loan.

Correct Answer
verified

Since much of the financial crisis of 2008 originated in shadow banking,the United States passed the Wall Street Reform and Consumer Protection Act.This bill is better known as:

Correct Answer
verified

Correct Answer
verified

Exam 14: Money, Banking, and the Federal Reserve System

The Canadian dollar in your pocket today is BEST described as:

Correct AnswerverifiedShow Answer

Money that some authority,generally a government,has ordered to be accepted as a medium of exchange is called _____ money.

Correct AnswerverifiedShow Answer

Before the creation of the Bank of Canada,who was the official lender of last resort in Canada?

Correct AnswerverifiedShow Answer

Included in the M2 definition of money are chequable bank deposits.

Correct AnswerverifiedShow Answer

In a deposits-only monetary system with a 5% required reserve ratio,a bank deposit of $1000 could increase the total amount of bank deposits by up to:

Correct AnswerverifiedShow Answer

Suppose that initially a bank has excess reserves of $800 and the reserve ratio is 20%.Then Andy deposits $1 000 of cash in his chequing account and the bank lends $600 to Molly.That bank can lend an additional:

Correct AnswerverifiedShow Answer

Bank-like activities undertaken by depository financial institutions like commercial banks,with regulatory oversight and protection,are said to be operating as a shadow bank.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

When the Bank of Canada buys $250 million worth of Treasury bills from commercial banks,the banks' reserves increase by less than $250 million.

Correct AnswerverifiedShow Answer

A reserve ratio is the:

Correct AnswerverifiedShow Answer

In securitization:

Correct AnswerverifiedShow Answer

The banking sector lobbied against the issuing of paper notes by the government because the banks thought this would erode their right to print money.

Correct AnswerverifiedShow Answer

The reserve ratio is the fraction of its:

Correct AnswerverifiedShow Answer

Money used to buy a ticket to a football game is functioning primarily as a:

Correct AnswerverifiedShow Answer

The Canadian economy recovered from the 2008 recession primarily because low interest rates caused a boom in the housing market.

Correct AnswerverifiedShow Answer

The reserve ratio is the:

Correct AnswerverifiedShow Answer

Shadow banking:

Correct AnswerverifiedShow Answer

____________ is lending to homebuyers who don't meet the usual criteria for qualifying for a loan.

Correct AnswerverifiedShow Answer

Since much of the financial crisis of 2008 originated in shadow banking,the United States passed the Wall Street Reform and Consumer Protection Act.This bill is better known as:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answer
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