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What Is Money?
Measuring Canada's Money Supply
Canada's Financial System
Role of Money in an Economy
Calculations
100
It offers the user the choice of keeping money in any combinations of currencies.
What is Electronic Money?
100
It is the total amount of cash in circulation outside the banks plus bank deposits.
What is Money Supply?
100
Name the three board categories of financial institutions.
What are (1) Deposit-taking and lending institutions, (2) Insurance companies and pension funds, and (3) Investments dealers and sales and finance companies.
100
Use ______ to purchase goods and service from individuals or businesses.
What is Money?
100
Bank credited a deposit of $10,000 for the initial depositor of cash. Realizing the depositor will only withdraw 10% in cash. The bank keeps this amount in the vault as excess reserves.
What is $9,000? Withdraw: 10% x $10,000 = $1000 Cash left in reserves: $10,000 - $1,000 = $9,000
200
Barter requires a ______ ______ of want.
What is Double Coincidence?
200
We are accounts in which customer agrees to deposit a fixed amount of money for fixed period of time in return for a higher rate of interest, which is surrendered if deposit is cashed in.
What is Term Deposits?
200
We are the two types of banking systems.
What are Unit banking system and Branch banking system?
200
Before the creation of money, the value of goods was determined in this way.
What is in relation to another good?
200
_______ is the formula for change in deposit.
What is Change in Deposit (D) = 1 / Reserve Ratio (R) x Change in Reserve (C)
300
We are the three functions that money has to perform.
What are medium of exchange, measure of value, and store of value?
300
It is money used primarily as medium of exchange to make payments
What is M1?
300
They appear in the right column of the balance sheet and are things that the bank owes.
What are Liabilities?
300
I am the first type of money
What is cattle?
300
Mr. Brian deposits a cheque of $8,100 in Bank A. Setting aside money for the required reserve. So Bank A has this amount in excess reserve.
What is $7,290? Required reserve: $8,100 x 10% = $810 Excess reserve: $8,100 - $810 = $7,290
400
It is an instrument for storing purchasing power for the future.
What is Store of Value?
400
It comprises of all currencies held by Canadians as well as large deposits held by businesses.
What is M3?
400
It decreases the amount of money that banks can create from a given increase in the monetary base.
What is Cash Drain?
400
Money that is accepted not because it can be exchanged for gold but because that it is a legal tender
What is Fiat money?
400
Mr. Frank deposits $9,000 in Bank B. Putting aside the amount for required reserves, Bank B lends the excess reserves as a loan to Ms. George. Bank B has this amount as its total assets.
What is $17,100? Required reserve: $9,000 x 10% = $900 Excess reserve: $9,000 - $900 = $8,100 Total Assets = Required reserve + Excess Reserve + Loan = $900 + $8,100 + $8,100 = $17,100
500
Name the SIX characteristics of Money.
What are (1) portable and easy to use, (2) durable, (3) easily divided into units, (4) should be recognizable by shape and color, (5) materials and designs are difficult to duplicate, (6) the money system must retain its value over time
500
It can be held by individuals, businesses, and governments and allow holders to transfer money immediately by cheque or debit card.
What is Demand Deposits?
500
It is the amount by which a change in the monetary base is multiplied to determine the resulting change in the money supply.
What is Deposit (or Money) Multiplier?
500
Only a fraction of the total amount of money deposited is safeguarded.
What is Fractional reserve banking?
500
$500 is deposited in a bank that is part of a multi-bank system with reserve ratio of 5%. This is the total amount of new money that has been created.
What is $9,500? Change in Deposit = 1/R x C = 1/0.05 x 500 = $10,000 Total increase in money supply = total new deposit - initial cash deposit = $10,000 - $500 = $9,500