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How does currency contribute to the money supply?


A) Currency held by the public and by banks is part of the money supply.
B) Currency held by the public is part of the money supply,but currency held by banks is not.
C) Currency held by the public is not part of the money supply,but currency held by banks is.
D) Currency held by the public or banks is not part of the money supply since it is not included in M1.

E) All of the above
F) B) and C)

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Explain why banks can influence the money supply if the required reserve ratio is less than 100 percent.

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When the reserve requirement is less tha...

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What is the fundamental function of credit cards?


A) Credit cards are used for deferring payments.
B) Credit cards are used as store of value.
C) Credit cards are used for increasing the money supply.
D) Credit cards are used as investment assets.

E) A) and B)
F) C) and D)

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How do deposits and reserves appear on a bank's T-account?


A) Both deposits and reserves are assets.
B) Both deposits and reserves are liabilities.
C) Deposits are assets,and reserves are liabilities.
D) Reserves are assets,and deposits are liabilities.

E) All of the above
F) A) and C)

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Which statement best illustrates the unit of account function of money?


A) You list prices for candy sold on your website,www.sweettooth.com,in dollars.
B) You pay for your NHL tickets with dollars.
C) You keep $10 in your backpack for emergencies.
D) You sell a used copy of your textbook for $40.

E) A) and D)
F) A) and C)

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Table 10-3 The following information pertains to the Bank of Kamloops. Table 10-3 The following information pertains to the Bank of Kamloops. -Refer to the Table 10-3.If the Bank of Canada requires banks to hold 5 percent of deposits as reserves,how much in excess reserves does the Bank of Kamloops now hold? A) $5 B) $25 C) $60 D) $65 -Refer to the Table 10-3.If the Bank of Canada requires banks to hold 5 percent of deposits as reserves,how much in excess reserves does the Bank of Kamloops now hold?


A) $5
B) $25
C) $60
D) $65

E) B) and C)
F) A) and B)

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During wars,the public tends to hold relatively more currency and relatively fewer deposits.Which statement best describes the effects of this increase in currency holdings?


A) Reserves would decrease,and the money supply would increase.
B) Reserves and the money supply would decrease.
C) Reserves would increase,but the money supply would be unchanged.
D) Reserves would decrease,but the money supply would be unchanged.

E) B) and C)
F) A) and D)

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Table 10-3 The following information pertains to the Bank of Kamloops. Table 10-3 The following information pertains to the Bank of Kamloops. -Refer to the Table 10-3.Assume that all other banks hold only the required 5 percent of deposits as reserves and people hold only deposits and no currency.If the Bank of Kamloops decides to hold exactly 5 percent in reserves,by how much would the economy's money supply increase? A) $500 B) $1200 C) $1500 D) $2000 -Refer to the Table 10-3.Assume that all other banks hold only the required 5 percent of deposits as reserves and people hold only deposits and no currency.If the Bank of Kamloops decides to hold exactly 5 percent in reserves,by how much would the economy's money supply increase?


A) $500
B) $1200
C) $1500
D) $2000

E) A) and B)
F) A) and C)

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Which of the following is included in M1+?


A) government bonds
B) demand deposits
C) savings deposits
D) travellers' cheques

E) A) and B)
F) A) and C)

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Suppose that the reserve ratio is 9 percent and that a bank has $2000 in deposits.What are its required reserves?


A) $100
B) $120
C) $140
D) $180

E) C) and D)
F) All of the above

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What is a characteristic of Scotiabank?


A) It can issue currency.
B) It is part of the "big 5" commercial banks group.
C) It acts as a central bank for Nova Scotia.
D) It is owned by the Canadian government.

E) B) and C)
F) None of the above

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What is a characteristic of paper money?


A) It has a high intrinsic value.
B) It hinders efficient allocation of resources.
C) It is valuable because it is generally accepted in trade.
D) It is valuable only because of the legal tender requirement.

E) A) and C)
F) All of the above

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How has the Bank of Canada historically viewed changes in reserve requirements to control the money supply?


A) It has been gradually lowering the reserve requirements to keep inflation rates low.
B) It has traditionally made frequent changes in order to stabilize the economy.
C) It has been reluctant to make frequent changes as this would disrupt the business of banking.
D) It has been gradually increasing the reserve requirements to keep inflation rates low.

E) A) and D)
F) B) and D)

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Which list contains only actions that increase the money supply?


A) lowering the bank rate; raising the reserve requirement ratio
B) lowering the bank rate; lowing the reserve requirement ratio
C) raising the bank rate; raising the reserve requirement ratio
D) raising the bank rate; lowering the reserve requirement ratio

E) None of the above
F) B) and D)

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Who determines the amount of money in the economy?


A) The Bank of Canada controls the money supply precisely.
B) The amount of money in the economy does not depend on the behaviour of depositors.
C) The amount of money in the economy depends in part on the behaviour of banks.
D) The Minister of Finance determines the amount of money in the economy by law.

E) All of the above
F) A) and C)

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What characterizes fiat money?


A) It has no intrinsic value.
B) It is backed by gold.
C) It has intrinsic value equal to its value in exchange.
D) It is an illiquid asset.

E) A) and C)
F) A) and B)

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Which statement best describes the outcomes of open-market purchases conducted by the Bank of Canada?


A) Bank reserves increase,and the money supply increases.
B) Bank reserves increase,and the money supply decreases.
C) The Bank of Canada borrows from member banks,which increases the money supply.
D) The Bank of Canada lends money to member banks,which decreases the money supply.

E) A) and B)
F) B) and D)

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If the reserve ratio decreased from 20 percent to 10 percent,which of the following would happen to the money multiplier?


A) It would rise from 10 to 20.
B) It would rise from 5 to 10.
C) It would fall from 10 to 5.
D) It would fall from 20 to 5.

E) All of the above
F) B) and C)

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What happened during the Great Depression in the early 1930s?


A) the Great Depression was as bad in Canada as it was in the United States.
B) more banks in Canada closed than in the United States
C) the money supply rose sharply.
D) the value of Canadian exports increased considerably.

E) B) and C)
F) A) and B)

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Which statement best defines the bank rate?


A) It is the interest rate the Bank of Canada charges banks.
B) It is one divided by the difference between one and the reserve ratio.
C) It is the interest rate banks receive on reserve deposits with Bank of Canada.
D) It is the interest rate that banks charge on overnight loans to other banks.

E) A) and D)
F) A) and C)

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