Question 1

The asset demand for money is most closely related to money functioning as a:

Accepted Answer

A)  unit of account
B)  means of exchange
C)  index of satisfaction
D)  measure of value
E)  store of purchasing powerF) C) and D)
G) A) and E)

Question 2

If chartered banks lower their reserve ratio:

Accepted Answer

A)  they will be prompted to reduce their lending
B)  the size of the money multiplier will increase
C)  the actual cash reserves of the chartered banks will increase
D)  the size of the money multiplier will decrease
E)  the size of the money multiplier will remain constantF) A) and B)
G) A) and C)

Question 3

The table below shows the amounts of money that households and businesses want to hold at various interest rates.

Interest Rate (%)  Quantity of money demanded  ($ billions)  10208406604802100\begin{array} { | c | c | } \hline \begin{array} { c } \text { Interest Rate } \( \% ) \end{array} & \begin{array} { c } \text { Quantity of money demanded } \\text { (\$ billions)  }\end{array} \\hline 10 & 20 \\hline 8 & 40 \\hline 6 & 60 \\hline 4 & 80 \\hline 2 & 100 \\hline\end{array} Interest Rate (%) ​108642​ Quantity of money demanded  ($ billions)  ​20406080100​​ 
-If the supply of money is $80 billion,the equilibrium interest rate will be:

Accepted Answer

A)  10 percent
B)  8 percent
C)  6 percent
D)  4 percent
E)  2 percent F) All of the above
G) A) and D)

Question 4

Suppose the demand for money and the supply of money increase simultaneously.We can:

Accepted Answer

A)  expect the interest rate to rise and bond prices to fall
B)  expect the interest rate to fall and bond prices to rise
C)  expect real output to expand
D)  expect the interest rate and bond prices both to fall
E)  not predict what will happen to the interest rate or bond pricesF) A) and C)
G) C) and E)

Question 5

If a person writes a cheque on a Saskatoon bank to purchase a new car,he or she is employing money as:

Accepted Answer

A)  a means of exchange
B)  a store of purchasing power
C)  a measure of value
D)  an income-earning asset
E)  a standard of deferred paymentsF) A) and B)
G) A) and C) A

Question 6

m curve would shift rightward and the equilibrium interest rate would rise B) Dm curve would shift leftward and the equilibrium interest rate would fall C) Sm curve would shift rightward and the equilibrium interest rate would fall D) Dm curve would shift leftward and the equilibrium interest rate would rise E) Dm curve would shift rightward and the equilibrium interest rate would fall" class="answers-bank-image d-inline" rel="preload" >
-If there is an increase in the economy's real output,the:

Accepted Answer

A)  Dm curve would shift rightward and the equilibrium interest rate would rise
B)  Dm curve would shift leftward and the equilibrium interest rate would fall
C)  Sm curve would shift rightward and the equilibrium interest rate would fall
D)  Dm curve would shift leftward and the equilibrium interest rate would rise
E)  Dm curve would shift rightward and the equilibrium interest rate would fallF) None of the above
G) All of the above

Question 7

If,in the money market,the quantity of money demanded exceeds the money supply,we would expect the interest rate to:

Accepted Answer

A)  fall, causing households and businesses to hold less money
B)  rise, causing households and businesses to hold less money
C)  rise, causing households and businesses to hold more money
D)  fall, causing households and businesses to hold more money
E)  stay the same, causing no change in the money held by households and businessesF) All of the above
G) None of the above B

Question 8

A $175 price tag on a cashmere sweater in a department store window is an example of money functioning as:

Accepted Answer

A)  a measure of value
B)  a standard of deferred payments
C)  a store of purchasing power
D)  a means of exchange
E)  an income-earning assetF) None of the above
G) B) and E)

Question 9

If the money demand and money supply curves shift leftward,we can conclude that the equilibrium:

Accepted Answer

A)  interest rate will decline, but we cannot predict the change in the equilibrium quantity of money
B)  quantity of money and the equilibrium interest rate will both increase
C)  quantity of money will increase, but we cannot predict the change in the equilibrium interest rate
D)  quantity of money will decline, but we cannot predict the change in the equilibrium interest rate
E)  quantity of money will stay the same, causing no change in the equilibrium interest rateF) C) and D)
G) A) and B)

Question 10

Consider the following table:

Interest  rate % Transaction demand  for money  Asset demand for  money  Money  supply 2$220$300$46042202804606220260460822024046010220220460\begin{array} { | c | c | c | c | } \hline \begin{array} { c } 	ext { Interest } \	ext { rate } \%\end{array} & \begin{array} { c } 	ext { Transaction demand } \	ext { for money }\end{array} & \begin{array} { c } 	ext { Asset demand for } \	ext { money }\end{array} & \begin{array} { c } 	ext { Money } \	ext { supply }\end{array} \\hline 2 & \$ 220 & \$ 300 & \$ 460 \\hline 4 & 220 & 280 & 460 \\hline 6 & 220 & 260 & 460 \\hline 8 & 220 & 240 & 460 \\hline 10 & 220 & 220 & 460 \\hline\end{array} Interest  rate %​246810​ Transaction demand  for money ​$220220220220220​ Asset demand for  money ​$300280260240220​ Money  supply ​$460460460460460​​ 
-The equilibrium interest rate is:

Accepted Answer

A)  2 percent
B)  4 percent
C)  6 percent
D)  8 percent
E)  10 percent F) B) and C)
G) A) and B)

Question 11

Suppose that a member of the public deposits $100 of currency in the bank.If the reserve ratio is 5 percent,the maximum amount by which the money supply can increase is:

Accepted Answer

A)  $2000
B)  $1900
C)  $500
D)  $475
E)  $100F) B) and D)
G) A) and B)

Question 12

Monetarists argue that the relationship between the amount of money which households and businesses want to hold and the level of national income:

Accepted Answer

A)  has increased historically because of increased accessibility to credit
B)  rises during recessions and falls during periods of full employment
C)  falls during recessions and rises during periods of full employment
D)  is stable
E)  varies both seasonally and through the business cycle in highly unpredictable waysF) None of the above
G) A) and C)

Question 13

If the reserve ratio were 100 percent,the value of the money multiplier would be:

Accepted Answer

A)  0
B)  1
C)  10
D)  100
E)  1000F) A) and C)
G) B) and D)

Question 14

The equation of exchange suggests that,if the supply of money (M) and the velocity of money (V) remain unchanged,an increase in the physical volume of products produced (Q) will cause:

Accepted Answer

A)  unemployment to rise as a percentage of the labour force
B)  a rise in the price level
C)  a decline in the price level
D)  an automatic budget deficit
E)  an automatic budget surplusF) A) and D)
G) B) and E)

Question 15

i. foreign currency deposits of Canadian residents at chartered banks in Canada
ii. non-chequable notice and personal term deposits at chartered banks
iii. currency outside chartered banks
iv. publicly held demand deposits and chequable notice deposits at chartered banks
v. non-chequable notice and personal term deposits at near banks and some other liquid assets
vi. nonpersonal term deposits at chartered banks
vii. chequable notice deposits at near banks

-The M3 definition of money is composed of:

Accepted Answer

A)  i through vi
B)  ii through vii
C)  ii, iii, iv, and v
D)  i, ii, iii, iv, and vi
E)  iv, v, and viF) A) and B)
G) C) and E)

Question 16

The table below shows the amounts of money that households and businesses want to hold at various interest rates.

Interest Rate (%)  Quantity of money demanded  ($ billions)  10208406604802100\begin{array} { | c | c | } \hline \begin{array} { c } \text { Interest Rate } \( \% ) \end{array} & \begin{array} { c } \text { Quantity of money demanded } \\text { (\$ billions)  }\end{array} \\hline 10 & 20 \\hline 8 & 40 \\hline 6 & 60 \\hline 4 & 80 \\hline 2 & 100 \\hline\end{array} Interest Rate (%) ​108642​ Quantity of money demanded  ($ billions)  ​20406080100​​ 
-If the interest rate is 6 percent while the supply of money is $80 billion,there is a:

Accepted Answer

A)  surplus of money, causing a rise in the interest rate
B)  shortage of money, causing a rise in the interest rate
C)  surplus of money, causing a fall in the interest rate
D)  shortage of money, causing a fall in the interest rate
E)  state of equilibrium, which means the interest rate is stable F) B) and C)
G) A) and B) C

Question 17

The reserve ratio is found using the following formula:

Accepted Answer

A)  desired reserves/deposits
B)  excess reserves/deposits
C)  deposits/desired reserves
D)  total reserves/deposits
E)  excess reserves/desired reservesF) C) and D)
G) A) and B)

Question 18

Stock market price quotations best exemplify money serving as a(n) :

Accepted Answer

A)  store of purchasing power
B)  an income-earning asset
C)  means of exchange
D)  index of satisfaction
E)  standard of deferred paymentsF) D) and E)
G) A) and E)

Question 19

i. foreign currency deposits of Canadian residents at chartered banks in Canada
ii. non-chequable notice and personal term deposits at chartered banks
iii. currency outside chartered banks
iv. publicly held demand deposits and chequable notice deposits at chartered banks
v. non-chequable notice and personal term deposits at near banks and some other liquid assets
vi. nonpersonal term deposits at chartered banks
vii. chequable notice deposits at near banks

-The M1+ definition of money is composed of:

Accepted Answer

A)  iii and vii
B)  ii, iii, and v
C)  iii and iv
D)  iii, iv and vii
E)  iv, v, and viF) B) and C)
G) A) and C)

Question 20

If the money supply is $180 billion and the economy's nominal GDP is $540 billion,then the:

Accepted Answer

A)  velocity of money is 1
B)  average price per final product sold is $3
C)  velocity of money is 4
D)  velocity of money is 3
E)  circulation period of money must be three monthsF) A) and C)
G) A) and B)

Exam 12: Money

The asset demand for money is most closely related to money functioning as a:

Correct Answer
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If chartered banks lower their reserve ratio:

Correct Answer
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Correct Answer
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Suppose the demand for money and the supply of money increase simultaneously.We can:

Correct Answer
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If a person writes a cheque on a Saskatoon bank to purchase a new car,he or she is employing money as:

Correct Answer
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A

-If there is an increase in the economy's real output,the:

Correct Answer
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If,in the money market,the quantity of money demanded exceeds the money supply,we would expect the interest rate to:

Correct Answer
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B

A $175 price tag on a cashmere sweater in a department store window is an example of money functioning as:

Correct Answer
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If the money demand and money supply curves shift leftward,we can conclude that the equilibrium:

Correct Answer
verified

Correct Answer
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Suppose that a member of the public deposits $100 of currency in the bank.If the reserve ratio is 5 percent,the maximum amount by which the money supply can increase is:

Correct Answer
verified

Monetarists argue that the relationship between the amount of money which households and businesses want to hold and the level of national income:

Correct Answer
verified

If the reserve ratio were 100 percent,the value of the money multiplier would be:

Correct Answer
verified

The equation of exchange suggests that,if the supply of money (M) and the velocity of money (V) remain unchanged,an increase in the physical volume of products produced (Q) will cause:

Correct Answer
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Correct Answer
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Correct Answer
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C

The reserve ratio is found using the following formula:

Correct Answer
verified

Stock market price quotations best exemplify money serving as a(n) :

Correct Answer
verified

Correct Answer
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If the money supply is $180 billion and the economy's nominal GDP is $540 billion,then the:

Correct Answer
verified

Exam 12: Money

The asset demand for money is most closely related to money functioning as a:

Correct AnswerverifiedShow Answer

If chartered banks lower their reserve ratio:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Suppose the demand for money and the supply of money increase simultaneously.We can:

Correct AnswerverifiedShow Answer

If a person writes a cheque on a Saskatoon bank to purchase a new car,he or she is employing money as:

Correct AnswerverifiedA

-If there is an increase in the economy's real output,the:

Correct AnswerverifiedShow Answer

If,in the money market,the quantity of money demanded exceeds the money supply,we would expect the interest rate to:

Correct AnswerverifiedB

A $175 price tag on a cashmere sweater in a department store window is an example of money functioning as:

Correct AnswerverifiedShow Answer

If the money demand and money supply curves shift leftward,we can conclude that the equilibrium:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Suppose that a member of the public deposits $100 of currency in the bank.If the reserve ratio is 5 percent,the maximum amount by which the money supply can increase is:

Correct AnswerverifiedShow Answer

Monetarists argue that the relationship between the amount of money which households and businesses want to hold and the level of national income:

Correct AnswerverifiedShow Answer

If the reserve ratio were 100 percent,the value of the money multiplier would be:

Correct AnswerverifiedShow Answer

The equation of exchange suggests that,if the supply of money (M) and the velocity of money (V) remain unchanged,an increase in the physical volume of products produced (Q) will cause:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedC

The reserve ratio is found using the following formula:

Correct AnswerverifiedShow Answer

Stock market price quotations best exemplify money serving as a(n) :

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If the money supply is $180 billion and the economy's nominal GDP is $540 billion,then the:

Correct AnswerverifiedShow Answer

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A

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B

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C

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