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ECON 1002 E Final Exam 1Exam

Course Code
ECON 1002
Study Guide

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Katrina Valles
ECON 1002 E
It is most beneficial to you to write this mock midterm UNDER EXAM CONDITIONS.
This means:
• Complete the midterm in 2.5 hour(s).
Work on your own.
• Keep your notes and textbook closed.
• Attempt every question.
After the time limit, go back over your work with a different colour or on a separate piece
of paper and try to do the questions you are unsure of. Record your ideas in the
margins to remind yourself of what you were thinking when you take it up at PASS.
The purpose of this mock exam is to give you practice answering questions in a timed
setting and to help you to gauge which aspects of the course content you know well and
which are in need of further development and review. Use this mock exam as a
learning tool in preparing for the actual exam.
Please note:
Come to the PASS workshop with your mock exam complete. During the
workshop you can work with other students to review your work.
Often, there is not enough time to review the entire exam in the PASS workshop.
Decide which questions you most want to review the Facilitator may ask
students to vote on which questions they want to discuss in detail.
Facilitators do not bring copies of the mock exam to the session. Please print out
and complete the exam before you attend.
Facilitators do not produce or distribute an answer key for mock exams.
Facilitators help students to work together to compare and assess the answers
they have. If you are not able to attend the PASS workshop, you can work alone
or with others in the class.
Good Luck writing the Mock Exam!!
Dates and locations of mock exam take-up:
Friday, December 14th, 2018: PA 201 5:00 7:00 p.m.
Saturday, December 15th, 2018: PA 201 5:00 7:00 p.m.

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Katrina Valles
ECON 1002 E
PART A Multiple Choice (60 Marks, 1.5 Each)
1. Define ‘medium of exchange’ as a function of money
a. The transfer of money from buyer to seller when they purchase goods and services
b. The act of withdrawing money from bank accounts to have physical cash
c. Transferring purchasing power from the present to the future
d. The yardstick people use to post prices and record debts
2. Which of the following items is the LEAST liquid?
a. Bonds
b. Cash
c. Real Estate
d. Stocks
3. Which of the following is an example of fiat money?
a. Gold
b. Canadian paper bills
c. Credit Cards
d. Stocks
4. What makes up the M1+ measure of the money stock?
a. Notice deposits + Chequable deposits
b. Currency + Chequable deposits
c. Currency + Notice deposits
d. Demand deposits + Everything in M2

Only pages 1-3 are available for preview. Some parts have been intentionally blurred.

Katrina Valles
ECON 1002 E
5. Which of the following would decrease the money supply?
a. Decreasing the reserve requirements
b. Decreasing the overnight rate
c. Buying government bonds
d. Selling foreign currency to support the domestic dollar’s exchange rate
6. If the supply of money in the economy decreases, what happens to money and prices?
a. Dollar appreciates; prices rise
b. Dollar appreciates; prices fall
c. Dollar depreciates; prices rise
d. Dollar depreciates; prices fall
7. Define ‘money demand’
a. The amount of wealth people want to hold in liquid form
b. The amount of money people wish to accumulate
c. The amount of money needed to purchase a basket of goods as determined by the
country’s Consumer Price Index
d. The theory that interest rates rise when there is an increase in cash withdrawals from bank
8. According to the Classical Dichotomy, what would happen if the money supply increased?
a. Nominal and real variables would increase by the same amount
b. Nominal and real variables would both increase, but nominal variables by a higher amount
c. Nominal variables would increase but real variables would remain unchanged
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