30 Questions
What is required for a double coincidence of wants?
Two buyers each wanting what the other has
Which of the following is a recognized function of money?
Unit of exchange
How does money function as a time machine for moving purchasing power?
Store of value
What do people give up when they demand money instead of interest on bonds?
Interest income
In the context of money, what does 'store of exchange' refer to?
Storing money for future transactions
Why is money considered a unit of account?
To provide a standard measure for prices
In a world where Say's Law always holds true, which function of money seems irrational?
Store of value
Which function(s) of money are considered rational in a world where Say's Law always holds true?
Unit of account and medium of exchange
Why does holding money to reduce uncertainty align more closely with Keynes' view of money?
Keynes' explanation of money as a store of value
In a perfectly efficient market, which function of money would be least needed?
Store of value
Which function of money becomes less relevant in a hyperinflationary economy?
Unit of account
When interest rates are high, which function of money may be less attractive to individuals seeking to maximize returns?
Store of value
What is the primary function of money that allows individuals to easily compare the relative prices of products and services?
Unit of account
What is considered as the opportunity cost of holding money?
Liquidity
Which of the following statements is FALSE regarding the opportunity cost of holding bonds?
It is liquidity
What is the role of interest rate in relation to holding money, as mentioned in the text?
Serves as the opportunity cost of holding money
Which function of money involves making transactions easier by acting as a generally accepted intermediary in trade?
Medium of exchange
In terms of opportunity cost, what does holding bonds involve according to the text?
Forgone interest from not holding money
What is the primary role of the Bank of Canada?
To maintain the stability and liquidity of the financial system
Do liquid assets generally earn a higher interest rate compared to loans to consumers?
No
Who creates money in Canada based on the text?
Both Bank of Canada and chartered banks
Is the money supply in Canada solely determined by the Bank of Canada?
Yes, exclusively by the Bank of Canada
What is the interest rate primarily according to the text?
The price of money
Which institution earns a lower interest rate on liquid assets?
Bank of Canada
Which statement is FALSE regarding bonds and money as a store of value?
Bonds are riskier than money.
What is the term for the connection between changes in money markets and changes in aggregate demand?
Monetary Transmission Mechanism
The quantity theory of money suggests that changes in the money supply primarily impact which of the following?
Inflation
How do bond prices typically react to changes in interest rates?
Bond prices and interest rates move in opposite directions.
Which factor is NOT directly impacted by changes in the money supply according to the quantity theory of money?
Unemployment
What effect does an increase in the money supply have on inflation according to the quantity theory of money?
Increases inflation
Test your knowledge on the three functions of money and the impact of Say's Law. Questions include why people give up interest on bonds to demand money, and which function of money seems unconventional in a world where Say's Law always holds true.
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