ADDITIONAL EXERCISES

CHAPTER

15 Money and Banking

1 What is ‘money’? Elaborate on the different types of money supply.

2 Describe the functions of a central bank.
3 Discuss how a single bank creates money.
4 By using a numerical example, explain how Consumer Price Index (CPI) is calculated and state
the uses of this index.
5 Using the money market and goods market, explain the effect of an increase in the aggregate
price level.