Money and Banking Final Exam
Questions
Course Introduction
Money and Banking explores the fundamental principles and operational mechanics of modern monetary systems and financial institutions. The course examines the nature and functions of money, the process of money creation, and the structure of banking systems, as well as the central banks role in managing the money supply and implementing monetary policy. Students analyze the interplay between financial markets, interest rates, and the broader economy, gaining insights into how tools such as open market operations, reserve requirements, and discount rates influence economic activity. The course also discusses current issues in banking, regulation, and the evolution of digital currencies, providing a comprehensive foundation for understanding the critical role of banks and money in economic stability and growth.
Recommended Textbook
Macroeconomics 5th Canadian Edition by N Gregory Mankiw
Available Study Resources on Quizplus
14 Chapters
1476 Verified Questions
1476 Flashcards
Source URL: https://quizplus.com/study-set/3819
Page 2
Chapter 1: The Science of Macroeconomics
Available Study Resources on Quizplus for this Chatper
54 Verified Questions
54 Flashcards
Source URL: https://quizplus.com/quiz/76220
Sample Questions
Q1) In a simple model of the supply and demand for pizza,the endogenous variables are:
A) the price of pizza and the price of cheese.
B) aggregate income and the quantity of pizza sold.
C) aggregate income and the price of cheese.
D) the price of pizza and the quantity of pizza sold.
Answer: D
Q2) In the relationship expressed in functional form,Y = G(K,L),Y stands for real GDP,K stands for the amount of capital in the economy,and L stands for the amount of labour in the economy.In this case G( ):
A) is the growth rate of real GDP when the amount of capital and labour in the economy is fixed.
B) indicates that the variables inside the parentheses are endogenous variables in the model.
C) is the symbol that stands for government input into the production process.
D) is the function telling how the variables in the parentheses determine real GDP.
Answer: D
To view all questions and flashcards with answers, click on the resource link above.
3
Chapter 2: The Data of Macroeconomics
Available Study Resources on Quizplus for this Chatper
116 Verified Questions
116 Flashcards
Source URL: https://quizplus.com/quiz/76213
Sample Questions
Q1) The labour-force participation rate is the percentage of the:
A) adult population that is employed.
B) adult population that is in the labour force.
C) labour force that is employed.
D) labour force that is unemployed.
Answer: B
Q2) If GDP (measured in billions of current dollars)is $5,465 and the sum of consumption,investment,and government purchases is $5,496,while exports equal $673,imports are:
A) $673.
B) -$673.
C) $704.
D) -$704.
Answer: C
Q3) The core inflation rate:
A) measures the change in producer prices.
B) is measured using a Paasche index.
C) excludes food and energy prices.
D) includes the price of exports and the price of imports.
Answer: C
To view all questions and flashcards with answers, click on the resource link above. Page 4
Chapter 5: The Open Economy
Available Study Resources on Quizplus for this Chatper
124 Verified Questions
124 Flashcards
Source URL: https://quizplus.com/quiz/76211
Sample Questions
Q1) In a small open economy,if domestic investment exceeds domestic saving,then the extra investment will be financed by:
A) borrowing from abroad.
B) lending from abroad.
C) the domestic government.
D) the World Bank.
Q2) The real exchange rate is determined by the equality of:
A) saving and the demand for net exports.
B) investment and the demand for net exports.
C) net capital outflow and the demand for net exports.
D) the negative value of net capital outflow and the demand for net exports.
Q3) If domestic saving exceeds domestic investment,then net exports are ______ and net capital outflows are ______.
A) positive; positive
B) positive; negative
C) negative; negative
D) negative; positive
To view all questions and flashcards with answers, click on the resource link above. Page 5
Chapter 6: Unemployment
Available Study Resources on Quizplus for this Chatper
112 Verified Questions
112 Flashcards
Source URL: https://quizplus.com/quiz/76210
Sample Questions
Q1) The earned income tax credit:
A) increases the government's tax revenue.
B) reduces the incomes of poor working families.
C) does not raise labour costs.
D) is not an alternative to raising the minimum wage.
Q2) Policies to substantially reduce unemployment should be targeted at:
A) the short-term unemployed.
B) the long-term unemployed
C) discouraged workers.
D) insiders and outsiders.
Q3) The minimum wage:
A) is usually about 75 percent of the average wage earned in manufacturing.
B) raises the wages of highly skilled workers.
C) encourages master workers to take on apprentices.
D) has its greatest impact on teenage unemployment.
Q4) If the economy were at a steady-state unemployment rate with a separation rate of 0.02 per month and a job-finding rate of 0.10 per month,and the labour force was 100 million,how many individuals would lose their jobs each month?
To view all questions and flashcards with answers, click on the resource link above. Page 6
Chapter 7: Economic Growth I
Available Study Resources on Quizplus for this Chatper
114 Verified Questions
114 Flashcards
Source URL: https://quizplus.com/quiz/76209
Sample Questions
Q1) If the Canadian production function is Cobb-Douglas with capital share 0.3,output growth is 3 percent per year,depreciation is 4 percent per year,and the Golden Rule steady-state capital-output ratio is 4.29,to reach the Golden Rule steady state,the saving rate must be:
A) 17.5 percent.
B) 25 percent.
C) 30 percent.
D) 42.9 percent.
Q2) In the steady state,the per-capita capital stock does not change because investment equals:
A) output per worker.
B) the marginal product of capital.
C) depreciation.
D) consumption.
Q3) Larger quantities of steady-state capital have both a positive and negative effect on consumption per worker in the Solow model (assume no population growth or technological progress).Explain.
Q4) Explain the two uses of saving in the steady state in the Solow model of an economy with population growth but no technological progress.
To view all questions and flashcards with answers, click on the resource link above. Page 7
Chapter 8: Economic Growth II
Available Study Resources on Quizplus for this Chatper
94 Verified Questions
94 Flashcards
Source URL: https://quizplus.com/quiz/76208
Sample Questions
Q1) The Solow residual equals the percentage change in output:
A) plus the percentage change in inputs.
B) minus the percentage change in prices. C) minus the percentage change in inputs. D) plus the percentage change in costs.
Q2) Suppose a government is able to impose controls that limit the number of children people can have.Use the Solow growth model of Chapter 8 to graphically illustrate the impact of the slower rate of population growth on the steady-state capital-labour ratio and the steady-state level of output per worker.Be sure to label the:
i.axes
ii.curves
iii.initial steady-state levels
iv.terminal steady-state levels
v.the direction curves shift.
Q3) The recent worldwide slowdown in economic growth began in the early:
A) 1960s.
B) 1970s.
C) 1980s.
D) 1990s.
To view all questions and flashcards with answers, click on the resource link above.
Page 8
Chapter 9: Introduction to Economic Fluctuations
Available Study Resources on Quizplus for this Chatper
106 Verified Questions
106 Flashcards
Source URL: https://quizplus.com/quiz/76207
Sample Questions
Q1) An adverse supply shock ______ the short-run aggregate supply curve ______ the natural level of output.
A) raises; but cannot affect B) raises; and may also lower
C) lowers; but cannot affect D) lowers; and may also lower
Q2) The relationship between the quantity of output demanded and the aggregate price level is called:
A) aggregate demand.
B) aggregate supply.
C) aggregate output.
D) aggregate consumption.
Q3) If the short-run aggregate supply curve is horizontal,an increase in union aggressiveness that pushes wages and prices up will result in ______ prices and ______ output in the short run.
A) higher; lower
B) lower; higher
C) higher; higher
D) lower; lower
To view all questions and flashcards with answers, click on the resource link above. Page 9
Chapter 10: Aggregate Demand I
Available Study Resources on Quizplus for this Chatper
142 Verified Questions
142 Flashcards
Source URL: https://quizplus.com/quiz/76219
Sample Questions
Q1) A decrease in confidence in stocks and bonds will lead households to shift their portfolios.As far as the money market is concerned,this development raises money ______ and ______ the equilibrium interest rate.
A) demand; raises B) demand; lowers C) supply; raises D) supply; lowers
Q2) (Exhibit: Keynesian Cross)In this graph,the equilibrium levels of income and expenditure are:
A) Y<sub>1</sub> and PE<sub>1</sub>.
B) Y<sub>2</sub> and PE<sub>2</sub>.
C) Y<sub>3</sub> and PE<sub>3</sub>.
D) Y<sub>3</sub> and PE<sub>4</sub>.
Q3) a.The interest rate affects which variable in the market for goods and services versus the market for real money balances?
b.The level of income affects which variable in the market for goods and services versus the market for real money balances?
To view all questions and flashcards with answers, click on the resource link above. Page 10
Chapter 13: Aggregate Supply and the Short-Run
Available Study Resources on Quizplus for this Chatper
112 Verified Questions
112 Flashcards
Source URL: https://quizplus.com/quiz/76218
Sample Questions
Q1) Assume that a firm has a production function Y = 1,000L<sup>1/2</sup>,where Y is output and L is labour.Labour demand is L<sup>d</sup> = 250,000(P/W)<sup>2</sup> and labour supply is L<sup>s</sup> = 31,250(W/P).Initially,there is an equilibrium in which output is 250,000,employment is 62,500,the nominal wage is 20,and the price level is 10.Demand for output is 250,000 at the given price,so all output is sold.Suddenly,demand at the given price drops to 200,000,but the firm does not lower its price.It lowers output and lays off workers.a.Assuming that the firm cannot produce for inventory,how much will the firm want to produce?
b.Assuming output equals the amount given under part a,what employment force will the firms want to hire?
c.If the firm continues to pay the same nominal and real wage,how much more labour will workers wish to supply than the firm will want to hire?
Q2) According to the Phillips curve,other things being equal,inflation depends positively on all of the following except:
A) expected inflation.
B) the unemployment rate.
C) the natural unemployment rate.
D) a supply shock,if one occurs.
To view all questions and flashcards with answers, click on the resource link above. Page 11
Chapter 15: Stabilization Policy
Available Study Resources on Quizplus for this Chatper
98 Verified Questions
98 Flashcards
Source URL: https://quizplus.com/quiz/76217
Sample Questions
Q1) If past economic fluctuations resulted from inept economic policies,then the historical evidence would support using:
A) active macroeconomic policy only.
B) passive macroeconomic policy only.
C) either active or passive macroeconomic policy.
D) neither active nor passive macroeconomic policy.
Q2) The political business cycle refers to the:
A) pattern of holding general elections every four or five years.
B) pattern of rising political donations during the run-up to each election.
C) manipulation of the economy to win elections.
D) pattern of recession and expansion that follows every election.
Q3) All of the following Canadian federal agencies are directly concerned with macroeconomic policy except the:
A) Department of Finance.
B) Standing Committee on Finance in the House of Commons.
C) Bank of Canada.
D) Auditor General's Office.
Q4) You are hired as a consultant to set up the central bank of a new country.Suggest at least two possible ways to structure the central bank to keep inflation levels low.
To view all questions and flashcards with answers, click on the resource link above. Page 12
Chapter 16: Government Debt and Budget Deficits
Available Study Resources on Quizplus for this Chatper
91 Verified Questions
91 Flashcards
Source URL: https://quizplus.com/quiz/76216
Sample Questions
Q1) A measure of the expected rate of inflation can be found by the:
A) yield on index bonds plus the yield on nominal bonds.
B) yield on index bonds minus the yield on nominal bonds.
C) observed rate of inflation minus the yield on real bonds.
D) observed rate of inflation minus the yield on nominal bonds.
Q2) From the Ricardian view,a consumer should not raise his or her consumption when taxes are cut but government spending is not cut because:
A) the government is going to raise taxes by exactly as much as the cut in the next year. B) the government is going to raise taxes by exactly as much as the cut plus interest in the next year.
C) the government is sure to raise taxes by an amount equal in present value to the debt incurred this year,sometime in the taxpayer's lifetime.
D) even if the government does not raise enough extra taxes during the taxpayer's lifetime to pay off,in present value,the debt incurred this year,the taxpayer should make provision for the taxes that will be levied on his or her heirs.
Q3) Explain how tax cuts can affect both aggregate demand and aggregate supply.
To view all questions and flashcards with answers, click on the resource link above.
13
Chapter 18: Investment
Available Study Resources on Quizplus for this Chatper
103 Verified Questions
103 Flashcards
Source URL: https://quizplus.com/quiz/76215
Sample Questions
Q1) Holding other factors constant,an increase in population due to a large increase in immigrants will ______ the price of housing and ______ the flow of residential housing investment.
A) increase; increase
B) increase; decrease
C) decrease; increase
D) decrease; decrease
Q2) For a firm facing financing constraints on its investment spending,the most important determinant of how much it invests is the:
A) firm's expected future profitability.
B) firm's current profitability.
C) interest rate.
D) firm's cost of capital.
Q3) Holding other factors constant,the decline in aggregate income during a recession will ______ the price of housing and ______ the flow of residential housing investment.
A) increase; increase
B) increase; decrease
C) decrease; increase
D) decrease; decrease
To view all questions and flashcards with answers, click on the resource link above. Page 14
Chapter 19: Money Supply and Money Demand
Available Study Resources on Quizplus for this Chatper
102 Verified Questions
102 Flashcards
Source URL: https://quizplus.com/quiz/76214
Sample Questions
Q1) Portfolio theories of the demand for money are based on money's function as a ________,while transaction theories of the demand for money are based on money's function as a ______.
A) medium of exchange; store of value
B) medium of exchange; unit of account
C) store of value; medium of exchange
D) store of value; unit of account
Q2) Banks create money in:
A) a 100-percent-reserve banking system but not in a fractional-reserve banking system.
B) a fractional-reserve banking system but not in a 100-percent-reserve banking system.
C) both a 100-percent-reserve banking system and a fractional-reserve banking system.
D) neither a 100-percent-reserve banking system nor a fractional-reserve banking system.
Q3) Why does the Bank of Canada not have complete control over the size of the money supply? Give at least two reasons.
To view all questions and flashcards with answers, click on the resource link above. Page 15
Chapter 20: The Financial System
Available Study Resources on Quizplus for this Chatper
108 Verified Questions
108 Flashcards
Source URL: https://quizplus.com/quiz/76212
Sample Questions
Q1) The precipitous fall in the price of assets that takes place when financial institutions must sell their assets quickly in the midst of a crisis is called a(n):
A) insolvency.
B) subprime sale
C) speculative bubble.
D) fire sale.
Q2) One avenue by which a loss of confidence in one financial institution spreads to another financial institution is through:
A) a steep decline in asset prices driven by fire sales to restore liquidity.
B) a sharp decline in interest rates to compensate for added risk.
C) an increase in government deposit-insurance coverage.
D) a rapid slowdown in the withdrawal of deposits.
Q3) An illiquid bank can become insolvent when it:
A) refuses to make promised payments.
B) sells additional stock to obtain funds.
C) sells assets at fire-sale prices to meet liquidity demands.
D) can extend the due dates of its liabilities.
Q4) What are the benefits of a well-functioning financial system? What are the costs of a financial crisis?
To view all questions and flashcards with answers, click on the resource link above. Page 16