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Midterm

# ECON 1010 Study Guide - Midterm Guide: Real Interest Rate, Money Creation, Potential OutputExam

Department
Economics
Course Code
ECON 1010
Professor
All
Study Guide
Midterm

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YORK UNIVERSITY
FACULTY OF LIBERAL ARTS AND PROFESSIONAL STUDIESDEPARTMENT OF ECONOMICS
AP/ECON 1010.03 SECTION M
Introduction to Macroeconomics
TEST #2VERSION A
!
INSTRUCTOR: Tuesday, March 15th, 2016
Gordana Colby 1 HOUR (8:30AM – 9:30AM)
LOCATION: ACE 102
NAME: _________________________________ _________________________________
LAST NAME FIRST NAME
STUDENT NUMBER: _______________________________________
SIGNATURE: _______________________________________
INSTRUCTIONS:
Make sure to print your NAME, STUDENT NUMBER and SIGN the sheet above. Write your
name and student number at the top left of each page.
Please fill in your answer to each question on the question paper in the space provided and
on the scantron sheet.
You must use a pencil to fill in the scantron sheets.
NO CALCULATORS are allowed.
You have 1 hour to answer all questions. All questions are multiple choice format.
For multiple choice answers, no work needs to be shown. The full marks will be granted if the
best answer is circled and zero otherwise.
Good luck!

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Econ 1010M
Name___________________________________
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
1)
If Wolfgang transfers \$1,000 out of his chequable deposit account and places it in his
non-chequable deposit account,
A)
M1 rises and M2 remains the same.
B)
M1 falls and M2 remains the same.
C)
M1 and M2 fall.
D)
M1 falls and M3 rises.
E)
M1 falls and M2 rises.
1)
2)
Which one of the following is not a service of depository institutions?
A)
pooling risk
B)
lowering the cost of monitoring borrowers
C)
lowering the cost of borrowing
D)
creating liquidity
E)
providing a place for reserve account deposits
2)
3)
When the Bank of Canada makes an open market purchase, its assets ________ and its liabilities
________.
A)
decrease; increase
B)
increase; decrease
C)
decrease; decrease
D)
increase; increase
E)
decrease; do not change
3)
4)
Suppose that a country has \$50 billion in bank reserves, \$100 billion in currency held by the
public, and \$500 billion in bank deposits. The currency drain ratio is
A)
B)
C)
D)
E)
4)
5)
The money creation process begins when
A)
bank deposits increase.
B)
desired reserves increase because of an increase in deposits.
C)
banks have excess reserves.
D)
banks lend reserves.
E)
the quantity of money increases.
5)
6)
Everything else remaining the same, an increase in real GDP
A)
decreases the demand for real money.
B)
increases the demand for real money.
C)
does not change the demand for real money.
D)
increases the demand for real money up to a point, and then demand will automatically
fall.
E)
decreases the demand for real money up to a point, and then demand will automatically
rise.
6)
VA -1