ECON 105 Macroeconomics Study Questions - K. Wainwright Part II: Money & Banking and Open Economy

Sep 30, 2026

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ECON 105 Macroeconomics study questions for K. Wainwright Part II: Money & Banking and Open Economy. The material is structured as multiple-choice problems testing core concepts in money supply creation, reserve ratios, central bank functions, Gresham’s law, deposit insurance, and the properties of different currency systems. Questions also assess how individuals use money (store of value, unit of account, medium of exchange, deferred payment) and how banking system reserves limit demand deposits and loan expansion.

LanguageEnglish

CategoryExam

FormatPDF

Pages24

Reading Time1 h 0 min

AccessFree to download

Multiple Choice Questions

Money creation and reserve ratios

Bank of Canada functions and deposit insurance

Currency systems and redemption

Gresham's law predictions

Money’s roles and the Canadian dollar

Demand deposits and investment concepts

ECON 105 Macroeconomics Study Questions K. Wainwright Part II: Money & Banking and Open Economy MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Suppose you found a $100 bill that was stored under your grandmother's mattress and you decided to deposit this money in a Regina Bank. If the desired reserve ratio were 20 percent and all excess reserves were lent out, the new deposit of $100 would lead to an expansion of the money supply of A) $120. B) $200. C) $500. D) $1200. E) $2000. 2) Which of the following is consistent with the predictions of Gresham's law? A) The disappearance of U.S. coins circulating in Canada during periods when the Canadian dollar is worth less than the U.S. dollar. B) Debasement of a metallic money will be followed by inflation. C) An increase in the money supply will be followed by inflation. D) increased circulation of U.S. coin in Canada during periods when the Canadian dollar is worth significantly less than the U.S. dollar. E) Increases in the money supply led to the hyperinflation of the 1920s in Germany. 3) The basic functions of the Bank of Canada include A) acting as banker for the chartered banks. B) regulating the stock market. C) acting as a broker for large private firms. D) providing deposit insurance for Canadian dollar deposits. E) all of the above 4) The major problem of a fractionally backed, convertible currency is that of A) paper money being less durable than gold. B) perennial shortages of paper currency. C) counterfeiting. D) the inability to redeem the currency into metal if too much is issued. E) clipping if too little of the currency is issued by the central monetary authority. 5) The basic functions of the Bank of Canada include A) regulating the money supply. B) supporting the financial markets. C) acting as banker for the chartered banks. D) acting as lender of last resort. E) all of the above 1) 2) 3) 4) 5) Macroeconomics Study Questions 6) A central bank can create money by A) increasing the rate of inflation. B) purchasing government securities on the open market. C) selling government treasury bills to the chartered banks. D) selling some of its foreign-currency reserves for domestic currency. E) issuing its own Central Bank bonds. 7) The basic functions of the Bank of Canada include A) regulating the stock market. B) acting as a lender of last resort to the commercial banks. C) acting as a lender of last resort to the large primary manufacturing firms. D) providing deposit insurance for Canadian dollar deposits. E) all of the above 8) The Canada Deposit Insurance Corporation (CDIC) was set up to protect A) member financial institutions in case of non-payment of loans from borrowers. B) depositors with Canadian dollar accounts in any Canadian financial institution for up to a maximum of $100 000 per institution. C) depositors with Canadian dollar accounts in member institutions for up to a maximum of $60 000 per bank. D) depositors of any currency in any Canadian financial institution for up to a maximum of $100 000 per institution. E) member financial institutions in case of non payment of loans from the government. 9) If most individuals will accept paper currency in transactions and paper currency is convertible into gold, then banks can safely issue A) more paper currency than the value of the gold they hold. B) as much paper currency as they please. C) paper currency equal to the bank's commercial debt divided by their gold reserves. D) paper currency equal to a fraction of the gold they hold. E) no more paper currency than the value of the gold they hold. 6) 7) 8) 9) 10) The Bank of Canada purchases $5 million worth of government securities from an investment 10) dealer with a cheque drawn on the Bank of Canada. The dealer deposits this cheque at a Canadian Char

FAQs

What is the purpose of the Canada Deposit Insurance Corporation (CDIC)?

CDIC protects Canadian dollar depositors at member institutions up to specified maximum amounts, as stated in the multiple-choice question.

Sep 30, 2026

Upload by sagouaw