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Chapter11(Practicequestion) - Chapter 11-The Monetary...

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Chapter 11—The Monetary System 1. Mia puts money into a piggy bank so she can spend it later. What function of money does this illustrate? a. store of value b. medium of exchange c. unit of account d. None of the above is correct. 2. Liquidity refers to a. the ease with which an asset is converted to the medium of exchange. b. a measurement of the intrinsic value of commodity money. c. the suitability of an asset to serve as a store of value. d. how many time a dollar circulates in a given year. 3. Fiat money a. is worthless. b. has no intrinsic value. c. may be used as a medium of exchange, but is not legal tender. d. performs all the functions of money except providing a unit of account. 4. The legal tender requirement means that a. people are more likely to accept the dollar as a medium of exchange. b. the government must hold enough gold to redeem all currency. c. people may not make trades with anything else. d. All of the above are correct. 5. Which of the following is not included in M1? a. currency b. demand deposits c. savings deposits d. travelers' checks 6. Credit card balances are included in a. M1 but not M2. b. M2 but not M1. c. M1 and M2. d. neither M1 nor M2. 7. M1 is a. smaller and less liquid than M2. b. smaller but more liquid than M2. c. larger than and less liquid than M2. d. larger than but more liquid than M2. 8. The amount of currency per person in Canada is about a. $200. b. $800. c. $1,000. d. $1,550 9. Members of the Board of Directors at Bank of Canada a. are appointed by the governor of Bank of Canada
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b. are appointed by the minister of Finance c. are appointed by the director of IMF d. Are appointed by the prime minister 10. Which of the following statements about Bank of Canada is incorrect? a. The members of the Board of Directors are appointed by the Governor General b. Bank of Canada makes monetary policy. c. Gold standard does not apply in Canada anymore d. Bank of Canada regulates chartered banks. 11. When Bank of Canada conducts open market transactions, it a. issues banknotes. b. buys or sells government bonds from the public. c. lowers the bank rate. d. increases its lending to chartered banks. 12. Bank of Canada can increase the money supply by conducting open market a. sales and raising the bank rate. b. sales and lowering the bank rate. c. purchases and raising the bank rate. d. purchases and lowering the bank rate. 13. Bank of Canada can influence unemployment in a. the short and long run. b. the short run, but not the long run. c.
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Chapter11(Practicequestion) - Chapter 11-The Monetary...

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