Exam 13: Monetary Policy

If money supply and money demand both increased,what would be the effect on interest rates and investment?

The shape of the Phillips curve suggests that policies that are aimed at reducing unemployment are likely to cause inflation.

If the Bank of Canada buys government securities from the chartered banks when the SRAS is relatively flat,what should we expect to happen to the price level and real GDP?

What will an increase in the bank rate when the SRAS is relatively steep likely lead to?

If the Bank of Canada sells bonds,what will be included in the short run impact of this policy?

When the economy is initially above full employment,how can monetary policy affect real output?

Why is the money supply curve almost perfectly inelastic?

The SRAS becomes steeper as the economy approaches the full employment level.

When is an expansionary monetary policy likely to increase real output more than just temporarily?

The SRAS curve is relatively flat when there is considerable excess capacity.

How do you think each of the following would affect the unemployment rate? A.The Bank of Canada increases the money supply and engineers an unexpected increase in the rate of inflation from 2 percent to 5 percent. B.The rate of inflation remains stable at 2 percent over a five-year period,as expected. C.There is an unexpected decrease in the rate of inflation from 10 percent to 3 percent.

What is the Phillips curve consistent with?

How would an economist describe the supply of money with respect to interest rates?

What will the combination of an increase in the bank rate and an open market sale of government securities by the Bank of Canada tend to result in?

If the Canadian economy is operating in the relatively flat portion of the SRAS and the U.S.government imposes a tariff on oil from the Alberta oil sands,what would the appropriate response of the Canadian authorities be?

Which of the following statements does NOT describe a real limitation to monetary policy?

Other things being constant,an increase in nominal GDP will generally increase the demand for money.

Which one of the following would be the most appropriate stabilization policy if the economy is operating beyond its long-run potential capacity?

Which of the following would tend to increase AD?

What effect would lowering the bank rate,other things being equal,tend to have?