Macroeconomics 212

13 Questions | Total Attempts: 224

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Macroeconomics Quizzes & Trivia

Macroeconomics chapter 23-25


Questions and Answers
  • 1. 
    • A. 

      Demand for; demand for

    • B. 

      Demand for; supply of

    • C. 

      Supply of; demand for

    • D. 

      Supply of; supply of

    • E. 

      Demand for loanable funds and the supply of; supply of loanable funds and the demand for

  • 2. 
    W hen a government has a budget surplus, the surplus
    • A. 

      Helps finance investment.

    • B. 

      Crowds-out private saving.

    • C. 

      Must be subtracted from private saving.

    • D. 

      Increases the world real interest rate.

    • E. 

      Decreases the demand for loanable funds.

  • 3. 
    An  increase in the government budget deficit ________. If the country is an international borrower, the government budget deficit ________. If the country is an international lender, the government budget deficit ________.
    • A. 

      Increases the country's supply of loanable funds; decreases foreign lending; increases foreign borrowing

    • B. 

      Decreases the country's demand for loanable funds; decreases foreign lending; increases foreign borrowing

    • C. 

      Increases the country's demand for loanable funds; increases foreign borrowing; decreases foreign lending

    • D. 

      Decreases the country's supply of loanable funds; increases foreign borrowing; decreases foreign lending

    • E. 

      Increases the country's demand for loanable funds; decreases foreign borrowing; increases foreign lending

  • 4. 
    A very small country is a net foreign lender and its supply of loanable funds increases. As a result, the equilibrium quantity of loanable funds used in the country ________ and the country's foreign lending ________.
    • A. 

      Increases; decreases

    • B. 

      Does not change; does not change

    • C. 

      Does not change; increases

    • D. 

      Increases; does not change

    • E. 

      Does not change; decreases

  • 5. 
    A very small country is a net foreign borrower and its demand for loanable funds increases. As a result, the equilibrium quantity of loanable funds used in the country ________ and the country's foreign borrowing ________.
    • A. 

      Does not change; increases

    • B. 

      Does not change; does not change

    • C. 

      Increases; increases

    • D. 

      Increases; does not change

    • E. 

      Increases; decreases

  • 6. 
    Which of the following is an economic function of a chartered bank?
    • A. 

      Issuing bank notes.

    • B. 

      Pooling risk.

    • C. 

      Supervising financial markets.

    • D. 

      Conducting monetary policy.

    • E. 

      None of the above.

  • 7. 
    T he Monetary Base consists of the sum of 
    • A. 

      Bank of Canada notes held within the Bank of Canada, bank deposits at the Bank of Canada, and coins held by banks.

    • B. 

      Bank of Canada notes held outside the Bank of Canada, the desired reserves of chartered banks, and coins held by banks.

    • C. 

      Bank of Canada notes held outside the Bank of Canada, bank deposits at the Bank of Canada, and coins held by banks and the public.

    • D. 

      Bank of Canada notes held within the Bank of Canada, bank deposits at the Bank of Canada, and coins held by banks and the public.

    • E. 

      Bank of Canada notes held outside the Bank of Canada, bank deposits at the Bank of Canada, and notes and coins held by banks.

  • 8. 
    Suppose the Bank of Canada follows a fixed-exchange rate of 0.50 U.K. pounds per Canadian dollar. If the demand for dollars temporarily decreases, to maintain the target exchange rate, the Bank can
    • A. 

      Sell dollars

    • B. 

      Buy dollars.

    • C. 

      Increase Canadian exports.

    • D. 

      Increase Canadian imports

    • E. 

      Violate purchasing power parity.

  • 9. 
    Money is
    • A. 

      Equivalent to barter.

    • B. 

      Currency plus credit cards plus debit cards.

    • C. 

      The same as gold.

    • D. 

      A means of payment.

    • E. 

      Currency plus coins.

  • 10. 
    W ithout money to act as a medium of exchange, 
    • A. 

      The standard of living in the economy would increase.

    • B. 

      Barter exchange would allow for a much simpler yet increased standard of living.

    • C. 

      The increased transaction costs associated with trading would prohibit some trades from taking place.

    • D. 

      Independence in production would lead to a proliferation of new products.

    • E. 

      All exchanges that take place under a monetary system would still take place.

  • 11. 
    The reserve ratio of a depository institution is the 
    • A. 

      Ratio of excess reserves to total deposits.

    • B. 

      Ratio of a bank's total reserves that are held in its vault or on deposit with the Bank of Canada to total deposits

    • C. 

      Ratio of a bank's total reserves that are held in its vault in cash only to total deposits.

    • D. 

      Ratio of a bank's total reserves that are held in an account with the Bank of Canada only to total deposits.

    • E. 

      Ratio of a bank's total reserves that a bank regards as necessary to conduct its business to total deposits.

  • 12. 
    T he ratio of currency to deposits is the
    • A. 

      Currency drain ratio.

    • B. 

      Excess reserve ratio.

    • C. 

      Monetary reserve ratio

    • D. 

      Reserve ratio.

    • E. 

      Currency ratio.

  • 13. 
    If the current account is in deficit and the capital account is also in deficit, then the official settlements account balance is
    • A. 

      Negative.

    • B. 

      Positive.

    • C. 

      Probably close to zero, but could be either negative or positive.

    • D. 

      Zero.

    • E. 

      Equal to the sum of the current account and the capital account.