SOLVED

3.4Â Â Measuring Money 1) If an individual moves money from a demand deposit account to a money market mutual fund, ________. A) M1+ decreases and M2 stays the same B) M1+ stays the same and M2+ increases C) M1+ stays the same and M2 stays the same D) M1+ increases and M2 decreases 2) If an individual moves money from a chequing account to a money market mutual fund, ________. A) M1+ decreases and M2+ increases B) M1+ stays the same and M2+ increases C) M1+ stays the same and M2+ stays the same D) M1+ increases and M2+ decreases 3) Defining money becomes ________ difficult as the pace of financial innovation ________. A) less; quickens B) more; quickens C) more; slows D) more; stops 4) Monetary aggregates are ________. A) measures of the money supply reported by the Bank of Canada B) measures of the wealth of individuals C) never redefined since “money” never changes D) reported by the Department of Finance annually 5) Recent financial innovation makes the Bank of Canada’s job of conducting monetary policy ________. A) easier, since the Bank of Canada now knows what to consider money B) more difficult, since the Bank of Canada now knows what to consider money C) easier, since the Bank of Canada no longer knows what to consider money D) more difficult, since the Bank of Canada no longer knows what to consider money 6) ________ is the narrowest monetary aggregate that the Bank of Canada reports. A) M0 B) M1+ C) M2 D) M3 7) The currency component includes paper money and coins held in ________. A) bank vaults B) ATMs C) the hands of the nonbank public D) the central bank 8) The components of the M1+ monetary aggregate are chequable deposits plus ________. A) currency B) currency plus savings deposits C) currency outside banks D) currency plus money market deposits 9) The M1+ measure of money includes ________. A) small denomination time deposits B) chequable deposits C) money market deposit accounts D) money market mutual fund shares 10) Which of the following is not included in the measure of M2? A) Personal deposits B) Non-personal demand deposits C) Currency D) Foreign currency deposits