McGraw-Hill Ryerson

Chapter 13. Money and Banking


1. Which one is an economic function of money?
A.a medium of communications
B.a factor of production
C.a store of bonds
D.a unit of account


2. The largest component of M1 is
A.coins
B.currency
C.personal savings deposits and nonpersonal notice deposits
D.demand deposits


3. Which of the following constitutes the largest element in the M2 money supply?
A.currency
B.coins
C.personal savings deposits and nonpersonal notice deposits
D.demand deposits


4. Chequing deposits are money because they are
A.legal tender
B.fiat money
C.token money
D.a medium of exchange


5. The supply of money M1 consists almost entirely of the debts of
A.the federal government
B.the Bank of Canada
C.depository institutions
D.the Bank of Canada and depository institutions


6.
Use the following table to answer about the money supply, given the following hypothetical data for the economy.
R-1 13a

The size of the M1 money supply is
A.$45 billion
B.$75 billion
C.$235 billion
D.$275 billion



7.
Use the following table to answer about the money supply, given the following hypothetical data for the economy.
R-1 13a

The size of the M2 money supply is
A.$235 billion
B.$275 billion
C.$366 billion
D.$406 billion



8.
Use the following table to answer about the money supply, given the following hypothetical data for the economy.
R-1 13a

The size of the M2+ money supply is
A.$366 billion
B.$406 billion
C.$489 billion
D.$529 billion



9. Which of the following best describes the backing of money in Canada?
A.the gold stored at the Bank of Canada
B.the belief of holders of money that it can be exchanged for desirable goods and services
C.the willingness of banks and the government to surrender something of value in exchange for money
D.the faith and confidence of the public in the ability of government to pay its debts


10. If the price level increases 20%, the value of money decreases
A.14.14%
B.16.67%
C.20%
D.25%


11. To keep the value of money fairly constant, the Bank of Canada
A.uses price and wage controls
B.employs fiscal policy
C.controls the money supply
D.buys stock


12. Which of the following best expresses how the use of money benefits our society?
A.money is intrinsically valuable
B.money creates wealth by generating interest income
C.money creates wealth by facilitating specialization
D.the larger the money supply the larger the economy's output


13. Which of the following statements is true?
A.Canadian currency is backed by gold
B.Canadian currency is backed by U.S. dollars
C.Canadian currency is backed by gold and U.S. dollars
D.Canadian currency is backed by the public's belief and confidence


14. Credit cards
A.are a form of money
B.allow people to economize on their holdings of money
C.cause people to need to hold more money
D.have no affect on people's money holdings


15. Serious inflation harms money's ability to serve as a
A.store of value
B.unit of account
C.medium of exchange
D.all of the above


16. In Canada, firms that operate as "banks" require a charter from
A.the Bank of Canada
B.the federal government
C.a provincial government
D.the provincial government in every province in which they operate


17. Which of the following is an example of a financial intermediary?
A.a medium of exchange
B.a credit card
C.a short-term loan
D.a credit union


18. What are the main liabilities of Canadian chartered banks?
A.deposits of their customers
B.loans to their customers
C.wages to their employees
D.debts to the Bank of Canada


19. What are the main assets of Canadian chartered banks?
A.their buildings
B.loans to their customers
C.computers
D.cash reserves



This is the end of the test. When you have completed all the questions and reviewed your answers, press the button below to grade the test.


HomeChapter IndexPreviousNext



What's New Complimentary Copies Order Information Get in Touch Educational Technology Author/Reviewer Information O.S.C.A.R.

To report problems, or suggestions, please contact the Webmaster.
Copyright 2000 McGraw-Hill Ryerson Limited. All rights reserved.
Terms of  Use. Read our Privacy Policy