ECO105Y1 Lecture Notes - Lecture 20: Monetary Transmission Mechanism, Inverse Relation, Opportunity Cost
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1. The market in which loans are bought and sold is called the:
loan market. |
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money market. |
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secondary loan market. |
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primary loan market. |
2. Which of the following is omitted in a barter transaction?
trade |
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medium of exchange |
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store of value |
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money |
3. If Bill performs plumbing upgrades for Alice in exchange for her incorporating his business, then their _________________________ will be satisfied.
balance of trade |
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double coincidence of wants |
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convenience of exchange |
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division of labour |
4. If loans become far less available, then sectors of the economy that ______________ like business investment, home construction, and car manufacturing can be dealt a crushing blow.
depend on borrowed money |
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typically generate extraordinary gains |
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make loans to financial capital markets |
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failed to diversify risk |
5. Stealth bank has deposits of $600 million. It holds reserves of $30 million and government bonds worth $80 million. If the bank sells its loans at the market value of $400 million, what will its total assets equal?
$110 million |
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$710 million |
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$480 million |
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$510 million |
6. Lance paid $175,000 for his house in 2003 and sold it for $325,000 in 2006. What function did the house serve during the time Lance owned it?
medium of exchange |
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unit of account |
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store of value |
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unit of exchange |
7.Which of the following terms is considered to be a narrow definition of the money supply that includes, among other things, currency?
savings |
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money |
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M2 |
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M1 |
8. Which of the following institutions determines the quantity of money in the economy as its most important task?
U.S. Department of the Treasury |
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Federal Open Market Committee |
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Central Bank |
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Federal Reserve Board of Governors |
9. How are the specific interest rates for the lending and borrowing markets determined?
U.S. Treasury Department Board policy |
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by the forces of supply and demand |
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through open market operations |
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by altering the discount rate |
10.When the central bank lowers the reserve requirement on deposits:
the money supply increases and interest rates decrease. |
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the money supply and interest rates decrease. |
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the money supply and interest rates increase. |
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the money supply decreases and interest rates increase. |