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Exam 14: Money, Banking, and Money Creation

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Question 71

Multiple Choice

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Refer to the information below.The monetary multiplier is: Consolidated balance sheet for the chartered banking system.All figures are in billions.Assume that the desired reserve ratio is 20 percent.

A) 4
B) 5
C) 8
D) 10

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

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Question 72

Multiple Choice

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A basic argument for using the M1 concept of money is that:

A) it includes all of the important financial assets that have any degree of liquidity.
B) the government collects data for the components of M1,but does not do so for M2 and M2+.
C) its components are superior to other financial assets as a store of value.
D) its components are directly and immediately spendable.

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

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Question 73

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The currency owned by chartered banks is included in the money supply.

Fiat money refers to "near-monies."

The greater the desired reserve ratio,the:

Actual cash reserves equal desired reserves plus excess reserves.

A bank owns a 10-story office building.In the bank's balance sheet,this would be an example of:

Consolidated balance sheet for the chartered banking system.Assume the desired reserve ratio is 10 percent.All figures are in billions. -Refer to the above information.The chartered banking system has excess reserves of:

The value of money varies:

A bank which has liabilities of $150 billion and a net worth of $20 billion must have:

If the desired reserve ratio is 10 percent,how much excess reserves does a bank acquire when a business deposits a $500 cheque drawn on another bank?

Consolidated balance sheet for the chartered banking system.Assume the desired reserve ratio is 10 percent.All figures are in billions. -Refer to the above information.After a deposit of $10 billion of new currency into a chequing account in the banking system,excess reserves will increase by:

Refer to the information below which shows the demand deposits and actual reserves of a banking system.When the desired reserve ratio is 20 percent,the money creating potential of the entire banking system is:

Which one of the following is presently preventing bank panics in Canada?

The following is information about a banking system: new currency deposited in the system = $40 billion;desired reserve ratio = 20%;excess reserves prior to the new currency deposit = $0. -Refer to the above information.The total demand deposit after the expansion of the money supply through loans is:

Chartered bank reserves are an asset to chartered banks but a liability to the Bank of Canada holding them.

A $200 price tag on a cashmere sweater in a department store window is an example of money functioning as a:

The Vancouver Bank's balance statement is as follows: All figures are in billions. -Refer to the above information and,assuming that desired reserve ratio is 10 percent,after a cheque for $20,000 is drawn and cleared against this bank,its excess reserve will be:

When a bank loan is repaid the supply of money:

The primary purpose of the desired reserve is to provide the means by which the monetary authorities can influence the lending ability of chartered banks.