Scribd
Upload
226 views3 pages

Econ 10.5 PDF

This document contains 10 past exam questions from the HKCEE Economics exam on the topic of money supply (M1 and M2) in Hong Kong. The questions cover topics such as: how withdrawals and deposits affect the money supply; the components included in M1 and M2; and calculating changes to the money supply based on bank balance sheets. Students are asked to explain how transactions would impact M1, M2, and their components. They are also asked to define M1 and M2, fill in blanks about the components of M2, and calculate changes to money supply based on provided bank balance sheet information.

Uploaded by

peter wong
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
226 views3 pages

Econ 10.5 PDF

This document contains 10 past exam questions from the HKCEE Economics exam on the topic of money supply (M1 and M2) in Hong Kong. The questions cover topics such as: how withdrawals and deposits affect the money supply; the components included in M1 and M2; and calculating changes to the money supply based on bank balance sheets. Students are asked to explain how transactions would impact M1, M2, and their components. They are also asked to define M1 and M2, fill in blanks about the components of M2, and calculate changes to money supply based on provided bank balance sheet information.

Uploaded by

peter wong
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 3

HKCEE ECONOMICS | 10.5 Money supply | P.

1. 1990/I/2di
Suppose the banks in Hong Kong do not hold excess reserves and the legal minimum reserve ratio is 25%.
Mr. Chan withdraws HK$10 000 from his savings account with Bank A and keeps the money at home.
Explain how the Hong Kong dollar M1 will change immediately after the above withdrawal. (2 marks)

2. 1992/I/3a, bi
(a)(i) Which of the following components is/are included in the money supply M1 in Hong Kong?
(2 marks)
Cash held by the non-bank public
Savings deposits
Demand deposits
Time deposits
(ii) Explain why cash held by banks in not included in the calculation of M1. (3 marks)
(b) In Hong Kong, Miss Wong puts $ 1,000 cash into The Hongkong and Shanghai Banking Corporation
Limited (HSBC) as a demand deposits.
(i) What would be the immediate effect on M1? Explain. (3 marks)

3. 1993/I/5ci
Suppose Mr. Chan sells his flat to a friend in Canada and receives an oversea remittance which amounts to
HK$3 million. He deposits the HK$3 million in his savings account with a bank in Hong Kong.
Explain the immediate effect on Hong Kong’s money supply M1 and M2. (4 marks)

4. 1995/I/10bii
In Hong Kong, a demand or savings deposit holder can use an EPS card to pay for his purchases in certain
shops. The function of an EPS card is that the amount of money is immediately transferred from the
customer’s bank deposit account to the shop’s bank deposit account.
Explain whether the money supply M2 will be affected when a person uses an EPS card to buy goods.
(2 marks)

59
HKCEE ECONOMICS | 10.5 Money supply | P.2

5. 1996/I/7
The following are the consolidated balance sheets of all commercial banks for January and February in a
certain year:
January
Assets ($mn) Liabilities ($mn)
Cash Reserve 40 Demand Deposits 20
Loans 60 Savings Deposits 40
Time Deposits 40
February
Assets ($mn) Liabilities ($mn)
Cash Reserve 50 Demand Deposits 30
Loans 50 Savings Deposits 40
Time Deposits 30
According to the above consolidated balance sheets, what are the changes in M1 and M2 from January to
February? Show your calculation. (4 marks)

6. 1999/I/5
Define money supply M1 and M2. (4 marks)

7. 2000/I/10aii
The balance sheet of the banking system of Economy A is shown below. Suppose all banks do not hold
excess reserves and the public holds $50 mn cash in hand.
Assets ($mn) Liabilities ($mn)
Cash reserves 200 Deposits 1000
Loans 800
Suppose the public now withdraws $10 million cash from the banks.
Calculate with explanation the change in the money supply. (4 marks)

8. 2002/I/6
In Hong Kong, Mr. Lee withdrew $300 000 from his savings account in Bank A. He deposited 50% of this
amount with a deposit-taking company and remitted through a bank another 20% of this amount overseas.
He put the rest of the money in his safety box in Bank B.
What is the immediate effect of the above transactions on Hong Kong’s money supply M1 and M3? Explain
your answer. (6 marks)

60
HKCEE ECONOMICS | 10.5 Money supply | P.3

9. 2002/I/10ai
The balance sheet of a banking system is as follows :
Assets ($Mn) Liabilities ($Mn)
Reserves 20 Deposits 100
Loans 80
The public deposits $10 million of cash into the banking system.
Suppose the banks do not hold excess reserves. Calculate the maximum possible change in the money
supply. Explain your answer. (5 marks)

10. 2008/I/6
In Hong Kong, the money supply M2 consists of five components. One is given in the following figure, Fill
in the other four components in the appropriate blanks. (4 marks)

M2 =
M1 = + Time deposits placed with banks
(1) _________________ + (3) _________________________
_________________ __________ placed with banks
+ + (4) ________________________
(2) _________________
________________________
_________________
_______ issued by banks held
outside the banking sector

61

You might also like