Question 3 (1 point) What does the calculated amount of currency per person in Canada suggest? ( a) People do not trust banks b) People tend to hold too much currency. c) Most payments are made in cash. O d) There is a significant illegal activity. Page 3 of 15 Previous Page Next PageQuestion 13 (1 point) Which of the following is NOT a tool of monetary policy? a) changing the bank rate increasing the tax rate reserve requirements O d) open-market operationsQuestion 12 (1 point) What is a bank's capital? O a) the bank's debt ( b) the bank's equity O c) the bank's reserves O d) the bank's deposits Page 12 of 15 Previous Page Next PageQuestion 8 (1 point) Which list contains only actions that increase the money supply? ( a) lowering the bank rate; raising the reserve requirement ratio Ob ) raising the bank rate; lowering the reserve requirement ratio c) lowering the bank rate: lowing the reserve requirement ratio (d) raising the bank rate; raising the reserve requirement ratio Page 8 of 15 Previous Page Next PageQuestion 14 (1 point) Which statement best explains the role of the Canadian Deposit Insurance Corporation (CDIC)? a) The CDIC determines the reserve requirement ( b) The CDIC determines the bank rate. c) The CDIC protects depositors in the event of bank failures. O () The CDIC protects commercial banks in the event of mortgage defaultsQuestion 6 (1 point) Table 10-1 First Bank of Dawson City Assets: Liabilities: Reserves $15.00 Deposits $100.00 Loans $85.00 Refer to the Table 10-1. If $400 is deposited into the First Bank of Dawson City, what will happen? a) Excess reserves initially increase by $340. O b ) Excess reserves initially increase by $400. c Required reserves initially increase by $8000 O d) The bank will be able to make additional loans totalling $400.Question 11 (1 point) What is the fundamental function of credit cards? O a) Credit cards are used for increasing the money supply (b) Credit cards are used for deferring payments. c) Credit cards are used as investment assets d) Credit cards are used as store of value.Question 10 (1 point) If the reserve ratio is 10 percent and a bank receives a new deposit of $800, which of the following will this bank most likely do? O : a) It will make new loans of $8000 ( b) It will be able to make new loans of $800. c) It will increase its required reserves by $8000. O d) It will initially see its total reserves increase by $800.Previous Page Next Page Page 9 of 15 Question 9 (1 point) Suppose the reserve ratio is 10 percent and banks do not hold excess reserves. Under these circumstances, suppose the Bank of Canada sells $60 million of bonds to the public. Which statement best describes the effects of this open- market operation? a ) Bank reserves increase by $60 million, and the money supply eventually increases by $800 million. O b ) Bank reserves increase by $60 million, and the money supply eventually increases by $600 million. Bank reserves decrease by $60 million, and the money supply eventually decreases by $800 million. decrease by $60 million. and the money supply eventually decreases by $600 million.Page 1 of 15 Question 1 (1 point) If the reserve ratio is 20 percent, how much new money can $1000 of excess reserves create? O a) $500 b) $5000 c) $50,000 O d ) $500,000 Page 1 of 15 Previous Page Next PageQuestion 15 (1 point) What is a debit card? O a) a means of borrowing ( b) a means of payment ( c) a form of money O d) a form of investmentQuestion 5 (1 point) Which of the following is included in M1-? O a) travellers' cheques b) demand deposits O d savings deposits O d) government bondsrage 2 Of 15 Question 2 (1 point) In a fractional reserve banking system with no excess reserves and no currency holdings, suppose the central bank buys $100 million of bonds. Which statement best describes the effects of this open-market operation? a) Reserves increase by $100 million, and the money supply increases by $100 million. b) Both reserves and the money supply increase by more than $100 million. Reserves and the money supply increase by less than $100 million O () Reserves increase by $100 million, and the money supply increases by more than $100 million. Page 2 of 15 Previous Page Next PageQuestion 7 (1 point) What happened during the Great Depression in the early 1930s? O a) the value of Canadian exports increased considerably. (b) the Great Depression was as bad in Canada as it was in the United States. c) more banks in Canada closed than in the United States O d) the money supply rose sharply.rage 4 of 15 Question 4 (1 point) To increase the money supply, what could the Bank of Canada do? a) decrease the money multiplier C b) decrease the reserve requirement increase the bank rate Od) sell government bonds