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Macroeconomics Study Set 43

Business

Quiz 14 :

B: Money, Banking, and Money Creation

Quiz 14 :

B: Money, Banking, and Money Creation

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One of the three basic functions of money is to serve as legal tender.
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True False
Answer:

Answer:

False

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Currency and coins held by banks are part of the M1 definition of money supply.
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True False
Answer:

Answer:

False

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The supply of money increases when the public purchases government securities from chartered banks.
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True False
Answer:

Answer:

False

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The granting of a $10,000 loan and the purchase of a $10,000 government securities from a securities dealer by a chartered bank have the same effect on the money supply.
True False
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Securitization is the process of slicing up and bundling groups of loans, mortgages, corporate bonds and other financial debts into distinct new securities.
True False
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If a coin is token money, its face value is greater than its intrinsic value.
True False
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Actual cash reserves equal desired reserves plus excess reserves.
True False
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Chartered banks are the major source of money creating in the Canadian economy.
True False
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The value of money varies inversely with the price level.
True False
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The basic source of money in our economy is the Department of Finance.
True False
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Chartered bank reserves are an asset to chartered banks but a liability to the Bank of Canada holding them.
True False
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Excess reserves are the amount by which desired reserves exceed actual cash reserves.
True False
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The primary purpose of the desired reserve is to provide the means by which the monetary authorities can influence the lending ability of chartered banks.
True False
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Mortgage-backed securities are bonds backed by mortgage payments.
True False
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Balance sheets always balance because assets must always equal liabilities plus net worth.
True False
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Chartered banks increase the supply of money when they purchase either personal IOUs or government bonds from businesses and households.
True False
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Money and banking in Canada are federal responsibilities.
True False
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The currency owned by chartered banks is included in the money supply.
True False
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Fiat money refers to "near-monies."
True False
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Chartered banks create money in the form of chequable deposits when they make loans.
True False
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