Question 1

Demand deposits are:

Accepted Answer

A)   debts of chartered banks and other financial institutions.
B)   debts of the Bank of Canada.
C)   credits of the Bank of Canada.
D)   credits of chartered banks and other financial institutions.E) A) and B)
F) A) and C)

Question 2

Mortgage-backed securities are:

Accepted Answer

A)   stocks backed by mortgage payments.
B)   bonds backed by mortgage payments.
C)   homes that are backed by mortgage payments.
D)   mortgages that are backed by the government.E) None of the above
F) All of the above

Question 3

Money is destroyed when:

Accepted Answer

A)   loans are made.
B)   cheques written on one bank are deposited in another bank.
C)   loans are repaid.
D)   the net worth of the banking system declines.E) B) and C)
F) None of the above

Question 4

The amount of money reported as M2:

Accepted Answer

A)   is smaller than the amount reported as M1.
B)   is larger than the amount reported as M1.
C)   excludes coins and currency.
D)   includes nonpersonal fixed-term deposits of residents booked in Canada.E) A) and B)
F) B) and D)

Question 5

When cash is deposited in a demand-deposit account in a chartered bank:

Accepted Answer

A)   the money supply increases.
B)   the money supply decreases.
C)   the composition of the money supply changes.
D)   the composition of the money supply does not change.E) A) and B)
F) All of the above

Question 6

Currency (paper money plus coins)  constitute about:

Accepted Answer

A)   80 percent of our M1 money supply.
B)   55 percent of our M1 money supply.
C)   24% percent of our M1 money supply.
D)   68 percent of our M1 money supply.E) A) and B)
F) B) and D)

Exam 12: Money, Banking, and Money Creation

Currency (paper money plus coins) constitute about:

Correct Answer
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The amount of money reported as M2:

Correct Answer
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Money is destroyed when:

Correct Answer
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Mortgage-backed securities are:

Correct Answer
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Demand deposits are:

Correct Answer
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When cash is deposited in a demand-deposit account in a chartered bank:

Correct Answer
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Exam 12: Money, Banking, and Money Creation

Currency (paper money plus coins) constitute about:

Correct AnswerverifiedShow Answer

The amount of money reported as M2:

Correct AnswerverifiedShow Answer

Money is destroyed when:

Correct AnswerverifiedShow Answer

Mortgage-backed securities are:

Correct AnswerverifiedShow Answer

Demand deposits are:

Correct AnswerverifiedShow Answer

When cash is deposited in a demand-deposit account in a chartered bank:

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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