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ECON 1010 Study Guide - Quiz Guide: Technological Change, Mortgage Loan, Foreign Exchange MarketExam


Department
Economics
Course Code
ECON 1010
Professor
All
Study Guide
Quiz

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Online Quiz#2
5) Money's function as a unit of account can best be described as
A) an agreed measure for stating the prices of goods and services.
B) an entry in an accounting ledger.
C) a method of recording transactions.
D) a commodity that can be exchanged for another commodity.
E) a generally accepted medium of exchange.
Answer: A
4) Without 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.
Answer: C
5) Money's function as a unit of account can best be described as
A) an agreed measure for stating the prices of goods and services.
B) an entry in an accounting ledger.
C) a method of recording transactions.
D) a commodity that can be exchanged for another commodity.
E) a generally accepted medium of exchange.
Answer: A
8) Money's function as a store of value can best be described as
A) an agreed measure for stating the prices of goods and services.
B) a guarantee of a double coincidence of wants.
C) an efficient means of writing contracts over a long time period.
D) something that can be held and exchanged later for goods and services.
E) a generally acceptable exchange system.
Answer: D
19) Which one of the following is a component of M2 but not of M1?
A) Currency outside banks.
B) Personal chequable deposits.
C) Personal non-chequable deposits.
D) Currency in a bank vault.
E) Canada Savings Bonds.
Answer: C
2) What is the value of M1 and the value of M2 in this economy in billions of dollars?
A) 105; 230.
B) 110; 235.

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C) 55; 430.
D) 55; 230.
E) 60; 430.
Answer: C
1) Which one of the following would not be considered a depository institution?
A) The Bank of Canada.
B) A credit union.
C) A caisse populaire.
D) A trust and mortgage loan company.
E) The Bank of Montreal.
Answer: A
9) The Bank of Canada is the lender of last resort. This means banks may borrow money from
the Bank of Canada
A) whenever they are short of reserves.
B) overnight.
C) if they have sufficient securities to support the loan.
D) if the banking system as a whole is short of reserves.
E) to finance a sudden and dramatic increase in overseas reserves.
Answer: D
2) Choose the correct statement.
A) The quantity of money measured in constant dollars is nominal money.
B) The quantity of money measured in dollars is nominal money.
C) The quantity of nominal money demanded is inversely related to the price level.
D) As real GDP increase the quantity of nominal money demanded decreases.
E) As the interest rate rises, the quantity of real money demanded increases.
Answer: B
6) Everything else remaining the same, an increase in real GDP
A) increases the demand for real money.
B) decreases 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.
Answer: A
13) Refer to Figure 24.4.2. Which one of the following best describes the response to a rise in the
price level?
A) A movement from A to B.
B) A movement from A to C.
C) A movement from A to F.
D) A movement from A to E.
E) None of the above.
Answer: E
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23) If the interest rate is below the equilibrium, how is equilibrium achieved in the money
market?
A) People buy goods to get rid of their excess money, lowering the price of goods and raising the
interest rate.
B) People sell goods to get rid of their excess money, lowering the price of goods and raising the
interest rate.
C) People sell bonds to get rid of their excess money, lowering the price of bonds and raising the
interest rate.
D) People sell bonds to try and raise more money, lowering the price of bonds and raising the
interest rate.
E) People buy bonds to get rid of their excess money, raising the price of bonds and raising the
interest rate.
Answer: D
3) Which one of the following newspaper quotations describes a movement along an LAS curve?
A) "The decrease in consumer spending may lead to a recession."
B) "The increase in consumer spending is expected to lead to inflation, without any increase in
real GDP."
C) "Recent higher wage settlements are expected to cause higher inflation this year."
D) "Growth has been unusually high the last few years due to more women entering the labour
force."
E) "The recent tornadoes destroyed many factories in Calgary and Edmonton."
Answer: B
Diff: 3
Topic: Aggregate Supply
7) Which of the following does not change short-run aggregate supply?
A) A change in the money wage rate.
B) Technological change.
C) A change in the full-employment quantity of labour.
D) An increase in the quantity of capital.
E) A change in expected future profits.
Answer: E
Diff: 2
Topic: Aggregate Supply
11) The short-run aggregate supply curve indicates
A) the relationship between the price level and real GDP demanded by consumers, investors,
governments, and net exporters.
B) the relationship between the price level and the natural unemployment rate.
C) the relationship between the purchasing power of wages and the quantity of labour supplied
by households.
D) the relationship between the quantity of real GDP supplied and the price level when the
money wage rate, the prices of other resources, and potential GDP remain constant.
E) the various quantities of real GDP producers supply at different income levels.
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