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If you wrote out a cheque to make a purchase of textbooks,which function of money would you be using?


A) A medium of exchange.
B) A unit of account.
C) A store of wealth.
D) The commercial function.

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

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Only one of the following is part of the money supply.Which is it?


A) Gold.
B) Currency in a bank's vault.
C) Demand deposits.
D) Available credit on people's credit cards.

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

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A bank will try to lend out all of its excess reserves.

A) True
B) False

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If at the end of the business day a commercial bank is short of cash reserves,what will it do?


A) Borrow cash from the Bank of Canada.
B) Increase its demand deposits.
C) Impose notice requirements on future withdrawals.
D) Borrow cash from the Bank of Canada,Increase its demand deposits,and Impose notice requirements on future withdrawals.

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

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Define money.

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Money is anything that is wide...

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Explain why a bank would not like to hold excess reserves.

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Banks are profit-oriented orga...

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The following is the balance sheet of the Leafs Bank The following is the balance sheet of the Leafs Bank -Refer to the information above to answer this question.Assume the target reserve ratio is 8 percent.By how much can this bank safely expand its loans? A) $43,200. B) $60,000. C) $6,000. D) $4,800. E) $75,000. -Refer to the information above to answer this question.Assume the target reserve ratio is 8 percent.By how much can this bank safely expand its loans?


A) $43,200.
B) $60,000.
C) $6,000.
D) $4,800.
E) $75,000.

F) A) and B)
G) A) and C)

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The money multiplier can be defined as the reciprocal of what?


A) The bank's actual reserves.
B) The MPC.
C) The bank's excess reserves.
D) The target reserve ratio.
E) The bank's demand deposits.

F) A) and B)
G) A) and C)

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What is one of the basic reasons for focusing on the M1 definition of money?


A) Only the components of M1 are regarded as liquid.
B) Statistics Canada is able to gather data for the components of M1,but cannot do so for M2 and M3.
C) Only the components of M1 can be used as a store of wealth.
D) Its components all have direct and immediate control over goods and services.
E) Only the components of M1 are regarded as secure and are able to retain their value.

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

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What ratio does the target reserve ratio refer to?


A) The bank's reserves to its liabilities and equity.
B) The bank's equity to its total assets.
C) The bank's reserves and securities to its demand deposits.
D) The bank's reserves to its demand deposits.
E) The bank's reserves to its total assets.

F) B) and D)
G) D) and E)

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Suppose that the Just Right Coffee Company negotiates a $100,000 loan from the Blackhawks Bank and takes $40,000 in the form of cash,leaving the remainder in its account.What has happened to the supply of money?


A) It has increased by $100,000.
B) It has decreased by $100,000.
C) It has increased by $40,000.
D) It has increased by $60,000.
E) It has not changed.

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

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The following is the balance sheet of the Regina Bank.(All figures are in $millions) The following is the balance sheet of the Regina Bank.(All figures are in $millions) -Refer to the information above to answer this question.Assume that the target reserve ratio is 5 percent.Suppose that one of the bank's customers writes out a cheque for $4 which clears against this bank.As a result,what will the bank's excess reserves now be? A) $0. B) $0.9. C) $4. D) $4.2. E) $8. -Refer to the information above to answer this question.Assume that the target reserve ratio is 5 percent.Suppose that one of the bank's customers writes out a cheque for $4 which clears against this bank.As a result,what will the bank's excess reserves now be?


A) $0.
B) $0.9.
C) $4.
D) $4.2.
E) $8.

F) A) and B)
G) A) and E)

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Which of the following are assets to a bank?


A) Demand deposits,equity,and reserves.
B) Reserves,loans to customers,and securities.
C) Reserves,property,and equity.
D) Equity,property,and demand deposits.

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

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All of the following,except one,are examples of a bank's assets.Which is the exception?


A) Reserves.
B) Demand Deposits.
C) Loans to customers.
D) Securities.
E) Fixed assets.

F) A) and B)
G) C) and D)

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Which function of money is in each of the following cases demonstrating? (1)You pay $10 for a movie ticket. (2)You deposit your tax refund check in your saving account. (3)A restaurant manager sets the prices of meals she serves in dollars. (4)A restaurant manager places the day's receipts in the safe. (5)McDonald's announces that a Big-Mac now costs only $1.00. (6)Bill Gates has a net worth of $50 billion.

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(1)Medium of exchange.
(2)Stor...

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What is the basis of the modern banking system?


A) Fractional reserves.
B) Commodity money.
C) A medium of exchange.
D) Gold.

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

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The following represents the consolidated balance sheet for a hypothetical banking system.The target reserve ratio is 8 percent. The following represents the consolidated balance sheet for a hypothetical banking system.The target reserve ratio is 8 percent. -Refer to the information above to answer this question.Which of the following is true of this banking system? A) It is under-reserved by $4,000. B) It is under-reserved by $50,000. C) It is over-reserved by $4,000. D) It is over-reserved by $50,000. E) It is under-reserved by $9,333. -Refer to the information above to answer this question.Which of the following is true of this banking system?


A) It is under-reserved by $4,000.
B) It is under-reserved by $50,000.
C) It is over-reserved by $4,000.
D) It is over-reserved by $50,000.
E) It is under-reserved by $9,333.

F) A) and C)
G) B) and D)

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What are bank reserves? What is the reserve ratio?

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Reserves are currency and depo...

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Which of the following is the best example of commodity money?


A) Gold
B) Stones
C) Cheque book money
D) Government bonds
E) Cigarettes

F) B) and D)
G) A) and B)

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