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How can the Bank of Canada directly protect a bank during a bank run?


A) by increasing reserve requirements
B) by selling government bonds to the bank
C) by lending reserves to the bank
D) by penalizing the bank in trouble

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

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If a bank uses $80 of excess reserves to make a new loan when the reserve ratio is 25 percent,what happens to the money supply in the very short term?


A) It decreases by $80.
B) It increases by $20.
C) It decreases by $20.
D) It increases by $80.

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

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Table 10-2 Table 10-2 -Refer to the Table 10-2.If the reserve requirement is 30 percent,what is this bank's reserve position? A) It has $29 000 of excess reserves. B) It needs $10 000 more in reserves to meet its reserve requirement. C) It needs $29 000 more in reserves to meet its reserve requirement. D) It just meets its reserve requirement. -Refer to the Table 10-2.If the reserve requirement is 30 percent,what is this bank's reserve position?


A) It has $29 000 of excess reserves.
B) It needs $10 000 more in reserves to meet its reserve requirement.
C) It needs $29 000 more in reserves to meet its reserve requirement.
D) It just meets its reserve requirement.

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

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Heather receives a payment in cash of $400 and she deposits it in a bank. a. If the banking system is 100 percent reserve, how does the money supply change? b. If the reserve requirement is 10 percent and the bank holds no excess reserve, how does the money supply change? c. If the reserve requirement is 10 percent and the bank holds an excess reserve of 2 percent, how does the money supply change?

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a.Since the $400 had been in circulation...

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Which of the following best describes the process of open-market sales conducted by the Bank of Canada?


A) The Bank of Canada sells Treasury bills, which increases the money supply.
B) The Bank of Canada sells Treasury bills, which decreases the money supply.
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 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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How could the Bank of Canada decrease the money supply?


A) by buying government bonds
B) by decreasing the bank rate
C) by decreasing the reserve requirement
D) by increasing the bank rate

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

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Which of the following is included in M2 but not in M1+?


A) demand deposits
B) corporate bonds
C) currency
D) term deposits

E) All of the above
F) None of the above

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Which two of the ten principles of economics imply that the Bank of Canada can profoundly affect the economy?

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1.Prices rise when the governm...

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Who chairs the Board of Directors of the Bank of Canada?


A) the governor of the Bank of Canada
B) the Prime Minister
C) the Minister of Finance
D) the Governor General

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

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Which of the following best defines barter?


A) It is an exchange of goods for money.
B) It is an exchange of money for foreign currency.
C) It is a generally accepted legal tender.
D) It is a transaction that requires a double coincidence of wants.

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

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Suppose that the reserve ratio is 7 percent and that a bank has $2000 in deposits.What are its required reserves?


A) $100
B) $120
C) $140
D) $160

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

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What is the difference between commodity money and fiat money? Why do people accept fiat currency in trade for goods and services?

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Commodity money has "intrinsic value," o...

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Which of the following 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) C) and D)

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When the Bank of Canada wants to change the money supply,what does it most frequently do?


A) It changes the bank rate.
B) It changes the reserve requirement.
C) It changes its open-market operations.
D) It changes the amount of currency in circulation.

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

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Which of the following 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) B) and C)
F) A) and D)

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For how long is the governor of the Bank of Canada appointed?


A) life
B) a seven-year term
C) a five-year term
D) a two-year term

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

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Which of the following plays the role of a central bank in Canada?


A) TD Canada Trust
B) the Bank of Montreal
C) the Bank of Canada
D) the Royal Bank of Canada

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

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Which of the three functions of money are met by each of the following assets in the Canadian economy? a.paper dollar b.precious metals c.collectibles such as baseball cards, stamps, and antiques

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a.medium of exchange...

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What is meant by the term "lender of last resort"? In what circumstances might the Bank of Canada be a lender of last resort?

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A lender of last resort is a lender to t...

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