Question 1

The cost of borrowing is commonly referred to as the ________.

Accepted Answer

A)   inflation rate
B)   exchange rate
C)   interest rate
D)   aggregate price level

Question 2

Which of the following is most likely to result from a stronger Canadian dollar?

Accepted Answer

A)   Canadian goods exported aboard will cost less in foreign countries, and so foreigners will buy more of them.
B)   Canadian goods exported aboard will cost more in foreign countries and so foreigners will buy more of them.
C)   Canadian goods exported abroad will cost more in foreign countries, and so foreigners will buy fewer of them.
D)   Canadians will purchase fewer foreign goods.

Question 3

Money is defined as ________.

Accepted Answer

A)   bills of exchange
B)   anything that is generally accepted in payment for goods and services or in the repayment of debt
C)   a repository of spending power
D)   the unrecognized liability of governments

Question 4

What is measured by the Gross Domestic Product (GDP)? what is included and what is excluded in the calculation of GDP?

Accepted Answer

GDP is the most commonly used measure of...

Question 5

From 2002-2011,the dollar strengthened in value against other currencies.Who was helped and who was hurt by this strong dollar?

Accepted Answer

Canadian consumers benefitted because im...

Question 6

Nominal GDP is output measured in ________ prices while real GDP is output measured in ________ prices.

Accepted Answer

A)   current; current
B)   current; fixed
C)   fixed; fixed
D)   fixed; current

Question 7

A ________ is an example of a security,which is a claim on future income or ________.

Accepted Answer

A)   bond; interest rate
B)   bond; debt
C)   stock; assets
D)   stock; debt

Question 8

Changes in stock prices ________.

Accepted Answer

A)   do not affect people's wealth and their willingness to spend
B)   affect firms' decisions to sell stock to finance investment spending
C)   are predictable
D)   are unimportant to decision makers

Question 9

Sustained downward movements in the business cycle are referred to as ________.

Accepted Answer

A)   inflation
B)   recessions
C)   economic recoveries
D)   expansions

Question 10

The S&P/TSX Composite reached a peak of over 14,000 in both ________.

Accepted Answer

A)   2000 and 2002
B)   2002 and 2005
C)   2008 and 2011
D)   2002 and 2011

Question 11

Everything else held constant,a weaker Canadian dollar will likely hurt ________.

Accepted Answer

A)   textile exporters in Quebec
B)   wheat farmers in Saskatchewan that sell domestically
C)   automobile manufacturers in Ontario that use domestically produced inputs
D)   furniture importers in British Columbia

Question 12

If ten years ago the prices of the items bought last month by the average consumer would have been much lower,then one can likely conclude that ________.

Accepted Answer

A)   the aggregate price level has declined during this ten-year period
B)   the average inflation rate for this ten-year period has been positive
C)   the average rate of money growth for this ten-year period has been positive
D)   the aggregate price level has risen during this ten-year period

Question 13

A security is also known as ________.

Accepted Answer

A)   a financial instrument
B)   a contingent claim
C)   the interest rate
D)   a liability

Question 14

In the 1970s,in Canada,interest rates trended upward.During this same time period,

Accepted Answer

A)   the rate of money growth declined
B)   the rate of money growth increased
C)   the government budget deficit (expressed as a percentage of GNP)  trended downward
D)   inflation fell

Question 15

Banks ________.

Accepted Answer

A)   are the smallest of the financial intermediaries
B)   are the largest financial intermediaries
C)   are barred from providing financial intermediation services
D)   can only provide services to corporations

Question 16

Stock prices are ________.

Accepted Answer

A)   relatively stable trending upward at a steady pace
B)   relatively stable trending downward at a moderate rate
C)   extremely volatile
D)   unstable trending downward at a moderate rate

Question 17

A key factor in producing high economic growth is ________.

Accepted Answer

A)   eliminating foreign trade
B)   well-functioning financial markets
C)   high interest rates
D)   stock market volatility

Question 18

The foreign exchange rate is ________.

Accepted Answer

A)   determined by the banks
B)   not important to Canadian individuals
C)   the relative price of two currencies
D)   the ratio of the foreign aggregate price level to the domestic aggregate price level

Question 19

High interest rates might ________ purchasing a house or car but at the same time high interest rates might ________ saving.

Accepted Answer

A)   discourage; encourage
B)   discourage; discourage
C)   encourage; encourage
D)   encourage; discourage

Question 20

If the aggregate price level at time t is denoted by Pt,the inflation rate from time t - 1 to t is defined as

Accepted Answer

A)    πt=(Pt−Pt−1) /Pt−1 \pi_{t}=\left(P_{t}-P_{t}-1\right)  / P_{t}-1 πt​=(Pt​−Pt​−1) /Pt​−1 
B)    πt=(Pt+1−Pt−1) /Pt−1 \pi_{\mathrm{t}}=\left(\mathrm{P}_{\mathrm{t}}+1-\mathrm{P}_{\mathrm{t}-1}\right)  / \mathrm{P}_{\mathrm{t}-1} πt​=(Pt​+1−Pt−1​) /Pt−1​ 
C)    πt=(Pt+1−Pt) /Pt \pi_{t}=\left(P_{t}+1-P_{t}\right)  / P_{t} πt​=(Pt​+1−Pt​) /Pt​ 
D)    πt=(Pt−Pt−1) /Pt \pi_{t}=\left(P_{t}-P_{t-1}\right)  / P_{t} πt​=(Pt​−Pt−1​) /Pt​

Exam 1: Why Study Money, banking, and Financial Markets

High interest rates might ________ purchasing a house or car but at the same time high interest rates might ________ saving.

Correct AnswerverifiedShow Answer

A security is also known as ________.

Correct AnswerverifiedShow Answer

A key factor in producing high economic growth is ________.

Correct AnswerverifiedShow Answer

Which of the following is most likely to result from a stronger Canadian dollar?

Correct AnswerverifiedShow Answer

What is measured by the Gross Domestic Product (GDP)? what is included and what is excluded in the calculation of GDP?

Correct AnswerverifiedGDP is the most commonly used measure of...View AnswerShow Answer

From 2002-2011,the dollar strengthened in value against other currencies.Who was helped and who was hurt by this strong dollar?

Correct AnswerverifiedCanadian consumers benefitted because im...View AnswerShow Answer

Money is defined as ________.

Correct AnswerverifiedShow Answer

Sustained downward movements in the business cycle are referred to as ________.

Correct AnswerverifiedShow Answer

If the aggregate price level at time t is denoted by Pt,the inflation rate from time t - 1 to t is defined as

Correct AnswerverifiedShow Answer

Stock prices are ________.

Correct AnswerverifiedShow Answer

Changes in stock prices ________.

Correct AnswerverifiedShow Answer

The S&P/TSX Composite reached a peak of over 14,000 in both ________.

Correct AnswerverifiedShow Answer

Everything else held constant,a weaker Canadian dollar will likely hurt ________.

Correct AnswerverifiedShow Answer

Banks ________.

Correct AnswerverifiedShow Answer

In the 1970s,in Canada,interest rates trended upward.During this same time period,

Correct AnswerverifiedShow Answer

Nominal GDP is output measured in ________ prices while real GDP is output measured in ________ prices.

Correct AnswerverifiedShow Answer

A ________ is an example of a security,which is a claim on future income or ________.

Correct AnswerverifiedShow Answer

The cost of borrowing is commonly referred to as the ________.

Correct AnswerverifiedShow Answer

The foreign exchange rate is ________.

Correct AnswerverifiedShow Answer

If ten years ago the prices of the items bought last month by the average consumer would have been much lower,then one can likely conclude that ________.

Correct AnswerverifiedShow Answer

High interest rates might purchasing a house or car but at the same time high interest rates might saving.

Correct Answer
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GDP is the most commonly used measure of...
View Answer

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Canadian consumers benefitted because im...
View Answer

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Nominal GDP is output measured in prices while real GDP is output measured in prices.

Correct Answer
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A is an example of a security,which is a claim on future income or .

Correct Answer
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