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UWecon 102 or mac 1bb3 (7)

UWecon 102 or mac 1bb3 (7) - 49 If there is $1 billion in...

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Unformatted text preview: 49. If there is $1 billion in currency in circulation outside banks, $1 billion in currency inside banks, $5 billion in bank chequing accounts and $10 billion in _._a bank saving accounts, M1 equals: §__,__ --— K C ‘ a) $1 billion flirtssmums -__,J b) $2 billion ‘_ cl) $17 billion 50. If you deposit $100 into a demand deposit at a bank, the money supply: Doesflngtchafinge c) Has decreased . H.as_.l_nc.r_ease.d s. 10) Will eventually fa“ 51. Suppose your bank lowers its minimum—balance requirement on personal chequing accounts by $500. You take $500 out of your personal chequing account and put it in your passbook savings account. Therefore M1 _7 and M2 a) Falls by $500, rises by $500 W Falls by $500, is unchanged C_ b) Is unchanged, is unchanged Is unchanged, rises by $500 52. The price level: Goes down with inflation 6) Is positively related to the value of money © @ Is inversely related to the value of money " - Both a) and c) are correct 53. Mr. Pierpont has wealth of $200,000. He wants to keep at least $80,000 in bonds at all times, and will shift $10,000 into bonds from his chequing account for eaCh percentage point that the interest rate on bonds exceeds the interest 8 rate on his chequing account. If the interest rate on chequing accounts is 4% and the interest rate on bonds is 9%, how much does Mr. Pierpont keep in his chequing account? ,- 1" " ‘ '- ' a) $50,000 c) $130,000 6 ® $70,000 cl) $150,000 5' .; 54. If prices increase [DY-"10% and nominal wages increase by 6%, then the: ‘5; ?- Real wage has not changed ,9 Nominal wage has not changed D b) Nominal wage rises by 10% RED Real wage falls by 4% 55. If the cyclical unemployment rate is greater than zero, then the actual unemployment rate is the net a! rate oimepmlosment: . a) Less than fl r“ _§_ceatet¢b.a.o____i C. b) Equal to None of the above _/ 56. If chartered banks are voluntarily holding EXCESS reserves this will cause: a) An expansion of demand deposits b) An increase in the potential for money creation C C? The link between desired reserves and money creation to weaken, ' »- ) Chartered banks to violate Bank of Canada regulations 57. .-\ adian curren .- _ Fiat money i c) Backed by the country's resources ‘4'"H‘Back'efl'5y gold 0) None of the above ' 133102701): Final Exam Fall 2006 A. Trimarc'ni I Page 9 of 17 ...
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