Money, Banking and Financial Institutions

A firm holds currency in its cash register, demand deposits in its commercial checking account, and 91-day Treasury bills in its investment portfolio. Which of these assets is categorized as near money, and what justification explains this classification?

Match each type or classification of money on the left with its corresponding economic definition or characteristic on the right.

According to Fisher's Quantity Theory of Money represented by the equation $MV = PT$, if an economy has a total money supply ($M$) of $\text{N}400\text{ million}$, an average price level ($P$) of $\text{N}20$, and a total volume of transactions ($T$) of $100\text{ million}$ units, what is the velocity of money circulation ($V$)?

A West African country records a general price level ($P$) of $\text{N}250$ per transaction unit and a total volume of physical transactions ($T$) of $800,000$ units per year. If the velocity of money circulation ($V$) is $5$, calculate the required total money supply ($M$), in millions of naira, according to Fisher's Quantity Theory of Money equation ($MV = PT$).

A commercial banking system operates under a cash reserve ratio of $10\%$. If a new cash injection into the system leads to a total net credit creation (new loans issued) of $₦450,000$, what was the value of the initial cash deposit, assuming commercial banks maintain no excess reserves and there are no cash leakages?

Match each commercial banking function or credit creation concept with its corresponding description or formula.

A commercial bank receives an initial primary cash deposit of $₦200,000$. If the banking system consequently generates a net credit creation of $₦800,000$, what is the mandatory cash reserve ratio set by the central bank?

Match each monetary policy tool employed by the central bank with its primary operational mechanism or macroeconomic function.

When an economy experiences persistent demand-pull inflation driven by excess liquidity, which open market operation (OMO) measure should the central bank implement to contract the money supply?

To combat severe inflationary pressures caused by excessive money supply in an economy, a central bank will purchase government securities on the open market to absorb liquidity from commercial banks.

A registered public limited company in Nigeria intends to raise capital by issuing corporate debentures and requires an institutional issuing house to underwrite the offer and accept bills of exchange. Which financial institution is specifically licensed to perform these wholesale investment functions?

Match each Non-Bank Financial Intermediary (NBFI) listed below with its primary economic function in the financial system:

Commercial banks experiencing immediate liquidity shortages often seek to rediscount short-term government and corporate debt securities or raise short-term funds through specialized financial intermediaries. Which of the following institutions primarily performs this function in the money market?

Bankers' Acceptances are money market instruments issued directly by the Central Bank to regulate money supply.

Non-bank financial intermediaries play vital roles in facilitating capital formation and risk management within an economy. Pair each financial institution listed on the left with its corresponding primary economic function on the right:

Suppose a customer makes a fresh cash deposit of $\text{₦}100,000$ into a commercial bank. If the central bank mandates a cash reserve ratio of $25\%$, what is the maximum total deposit expansion that the banking system can generate?

Match each commercial banking concept or credit creation term in Column A with its correct definition or description in Column B.

Treasury Bills are short-term money market instruments issued by the Central Bank on behalf of the government primarily to raise long-term capital for infrastructure development projects.

A yam farmer in a rural village requires a new hoe for planting and offers yams to a local blacksmith. However, the blacksmith declines the offer because he only requires goats for his tools. Which major drawback of trade by barter is highlighted in this situation?

In a moneyless economy, direct exchange of goods and services gives rise to several major transaction frictions. Match each specific limitation of the barter system on the left with the corresponding function of money on the right that resolves it.