Question 1

If nominal GDP is $5 billion and velocity is 10,then

Accepted Answer

A) real GDP equals $50 billion. 
B) actual money balances held by the nonbank public equal $50 billion. 
C) actual money balances held by the nonbank public equal $500 million. 
D) the average price of national output is $50 per unit. 
A) real GDP equals $50 billion. 
B) actual money balances held by the nonbank public equal $50 billion. 
C) actual money balances held by the nonbank public equal $500 million. 
D) the average price of national output is $50 per unit.

Question 2

If M = $100,Q = 500 and P = $2,then V is equal to

Accepted Answer

A) 0)10. 
B) 1)0. 
C) 10. 
D) 50. 
A) 0)10. 
B) 1)0. 
C) 10. 
D) 50.

Question 3

If the economy is underutilizing its economic resources,the Bank of Canada should

Accepted Answer

A) discourage investment spending. 
B) expand the money supply to increase aggregate demand. 
C) decrease aggregate supply. 
D) contract the money supply. 
A) discourage investment spending. 
B) expand the money supply to increase aggregate demand. 
C) decrease aggregate supply. 
D) contract the money supply.

Question 4

The Board of Directors of the Bank of Canada is

Accepted Answer

A) elected by the general public. 
B) appointed for three year terms. 
C) composed of representatives from the country's 12 largest commercial banks. 
D) composed of 12 members of the Parliament. 
A) elected by the general public. 
B) appointed for three year terms. 
C) composed of representatives from the country's 12 largest commercial banks. 
D) composed of 12 members of the Parliament.

Question 5

What is the equation of exchange? How can the equation of exchange be converted into the quantity theory of money?

Accepted Answer

The equation of exchange is MSV = PQ,whe

Question 6

Monetarists maintain that the Bank of Canada should

Accepted Answer

A) tighten monetary policy whenever a recession is anticipated. 
B) adopt a variable monetary policy. 
C) adopt a monetary rule that specifies a consistent annual growth rate. 
D) let the open market committee be in charge of all money supply changes. 
A) tighten monetary policy whenever a recession is anticipated. 
B) adopt a variable monetary policy. 
C) adopt a monetary rule that specifies a consistent annual growth rate. 
D) let the open market committee be in charge of all money supply changes.

Question 7

Figure 14-2  
-In Figure 14-2,suppose the economy was initially in an equilibrium at point A.What point would represent the short run equilibrium if the Bank of Canada makes an open market purchase of bonds?

Accepted Answer

A) A 
B) B 
C) C 
D) D 
A) A 
B) B 
C) C 
D) D

Question 8

An expansionary monetary policy results in lower interest rates,which in turn

Accepted Answer

A) increase foreign demand for Canadian financial instruments,raising the international price of the dollar and reducing net exports. 
B) increase the foreign demand for Canadian financial instruments,lowering the international price of the dollar and decreasing net exports. 
C) reduce the international price of the dollar and increase net exports. 
D) reduce the foreign demand for Canadian financial instruments and reduce net exports. 
A) increase foreign demand for Canadian financial instruments,raising the international price of the dollar and reducing net exports. 
B) increase the foreign demand for Canadian financial instruments,lowering the international price of the dollar and decreasing net exports. 
C) reduce the international price of the dollar and increase net exports. 
D) reduce the foreign demand for Canadian financial instruments and reduce net exports.

Question 9

When interest rates rise,the transactions demand for money usually

Accepted Answer

A) decreases. 
B) increases. 
C) decreases initially and then increases to the original position. 
D) does not change. 
A) decreases. 
B) increases. 
C) decreases initially and then increases to the original position. 
D) does not change.

Question 10

What are three reasons people want to hold money balances?

Accepted Answer

There are three reasons people hold mone

Question 11

It can be argued that the Bank of Canada's most important function is

Accepted Answer

A) to provide for check collection and clearing. 
B) to create stability in the Canadian banking system. 
C) to set the legal,controlled consumer interest rates. 
D) to lend to risky customers. 
A) to provide for check collection and clearing. 
B) to create stability in the Canadian banking system. 
C) to set the legal,controlled consumer interest rates. 
D) to lend to risky customers.

Question 12

The interest rate that the Bank of Canada charges depository institutions when they borrow reserves directly from the Bank of Canada is the

Accepted Answer

A) prime rate. 
B) aggregate rate. 
C) bank rate. 
D) expansionary rate. 
A) prime rate. 
B) aggregate rate. 
C) bank rate. 
D) expansionary rate.

Question 13

The Bank of Canada is said to be the "lender of last resort" in that

Accepted Answer

A) it stands ready to "bail out" any chartered bank that it has decided should not fail. 
B) it makes loans to individuals whom commercial banks do not believe are credit-worthy. 
C) it charges a higher interest rate to borrowers than does any other bank. 
D) it functions as the government's bank only when commercial banks fail to do so. 
A) it stands ready to "bail out" any chartered bank that it has decided should not fail. 
B) it makes loans to individuals whom commercial banks do not believe are credit-worthy. 
C) it charges a higher interest rate to borrowers than does any other bank. 
D) it functions as the government's bank only when commercial banks fail to do so.

Question 14

The quantity theory of money can be written as

Accepted Answer

A) P = MsV/Q. 
B) MsV = Q/P. 
C) Ms = PQV. 
D) V = MPQ. 
A) P = MsV/Q. 
B) MsV = Q/P. 
C) Ms = PQV. 
D) V = MPQ.

Question 15

The transactions demand for money refers to

Accepted Answer

A) the desire for wealth. 
B) the demand to hold money because money is used in all non-barter transactions. 
C) the desire for income. 
D) the demand to hold money as a long-term store of value. 
A) the desire for wealth. 
B) the demand to hold money because money is used in all non-barter transactions. 
C) the desire for income. 
D) the demand to hold money as a long-term store of value.

Question 16

What are the tools available to the Governor of the bank of Canada to control the money supply? Describe in detail how each is used to increase or decrease the money supply.

Accepted Answer

1.Open market operations - buy bonds fro

Question 17

If the Bank of Canada wants to target a rate of growth of the money supply faster than what currently exists,it must

Accepted Answer

A) also push for higher interest rates. 
B) accept a lower interest rate. 
C) accept lower bond prices. 
D) permit price deflation. 
A) also push for higher interest rates. 
B) accept a lower interest rate. 
C) accept lower bond prices. 
D) permit price deflation.

Question 18

Figure 14-2  
-In Figure 14-2,what is the value of the long run equilibrium real GDP?

Accepted Answer

A) $4.5 billion 
B) $5 billion 
C) $5.5 billion 
D) cannot be determined 
A) $4.5 billion 
B) $5 billion 
C) $5.5 billion 
D) cannot be determined

Question 19

The central bank for Canada is

Accepted Answer

A) the Bank of Montreal. 
B) the Parliamentary Bank. 
C) the Bank of Canada. 
D) the First National Bank of Canada. 
A) the Bank of Montreal. 
B) the Parliamentary Bank. 
C) the Bank of Canada. 
D) the First National Bank of Canada.

Question 20

Suppose the economy is initially in long-run and short-run equilibrium.If the Bank of Canada decides to pursue a contractionary monetary policy,we will see

Accepted Answer

A) bond prices fall,interest rates fall,aggregate demand remain unchanged as consumption spending decreases,but investment spending increases.Real national income remains constant in both the short run and the long run,but the price level falls in both. 
B) bond prices fall,interest rates rise,aggregate demand fall as investment and consumption spending decrease,and real national income and the price level decreasing in the short-run,but only the price level decreasing in the long run. 
C) bond prices fall,interest rates rise,aggregate demand falls as investment spending decreases and consumption spending remains unchanged,and real national income and the price level decrease in the short run,but only the price level fall in the short run. 
D) interest rates rise but no change in bond prices.Aggregate demand falls as consumption spending and investment spending decrease,and the price level and real national income fall in both the short run and the long run. 
A) bond prices fall,interest rates fall,aggregate demand remain unchanged as consumption spending decreases,but investment spending increases.Real national income remains constant in both the short run and the long run,but the price level falls in both. 
B) bond prices fall,interest rates rise,aggregate demand fall as investment and consumption spending decrease,and real national income and the price level decreasing in the short-run,but only the price level decreasing in the long run. 
C) bond prices fall,interest rates rise,aggregate demand falls as investment spending decreases and consumption spending remains unchanged,and real national income and the price level decrease in the short run,but only the price level fall in the short run. 
D) interest rates rise but no change in bond prices.Aggregate demand falls as consumption spending and investment spending decrease,and the price level and real national income fall in both the short run and the long run.

If nominal GDP is $5 billion and velocity is 10,then

If M = $100,Q = 500 and P = $2,then V is equal to

If the economy is underutilizing its economic resources,the Bank of Canada should

The Board of Directors of the Bank of Canada is

What is the equation of exchange? How can the equation of exchange be converted into the quantity theory of money?

Monetarists maintain that the Bank of Canada should

Figure 14-2 -In Figure 14-2,suppose the economy was initially in an equilibrium at point A.What point would represent the short run equilibrium if the Bank of Canada makes an open market purchase of bonds?

An expansionary monetary policy results in lower interest rates,which in turn

When interest rates rise,the transactions demand for money usually

What are three reasons people want to hold money balances?

It can be argued that the Bank of Canada's most important function is

The interest rate that the Bank of Canada charges depository institutions when they borrow reserves directly from the Bank of Canada is the

The Bank of Canada is said to be the "lender of last resort" in that

The quantity theory of money can be written as

The transactions demand for money refers to

What are the tools available to the Governor of the bank of Canada to control the money supply? Describe in detail how each is used to increase or decrease the money supply.

If the Bank of Canada wants to target a rate of growth of the money supply faster than what currently exists,it must

Figure 14-2 -In Figure 14-2,what is the value of the long run equilibrium real GDP?

The central bank for Canada is

Suppose the economy is initially in long-run and short-run equilibrium.If the Bank of Canada decides to pursue a contractionary monetary policy,we will see

The Nature of Economics

Production Possibilities and Economic Systems

Demand and Supply

Introduction to Macroeconomics

Measuring the Economys Performance

Modelling Real Gdp and the Price Level in the Long Run

Economic Growth and Development

Modelling Real Gdp and the Price Level in the Short Run

Consumption, investment, and the Multiplier

The Public Sector

Fiscal Policy and the Public Debt

Money and the Banking System

Money Creation and Deposit Insurance

Issues in Stabilization Policy

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters

Exam 14: The Bank of Canada and Monetary Policy

If nominal GDP is $5 billion and velocity is 10,then

If M = $100,Q = 500 and P = $2,then V is equal to

If the economy is underutilizing its economic resources,the Bank of Canada should

The Board of Directors of the Bank of Canada is

What is the equation of exchange? How can the equation of exchange be converted into the quantity theory of money?

Monetarists maintain that the Bank of Canada should

Figure 14-2 -In Figure 14-2,suppose the economy was initially in an equilibrium at point A.What point would represent the short run equilibrium if the Bank of Canada makes an open market purchase of bonds?

An expansionary monetary policy results in lower interest rates,which in turn

When interest rates rise,the transactions demand for money usually

What are three reasons people want to hold money balances?

It can be argued that the Bank of Canada's most important function is

The interest rate that the Bank of Canada charges depository institutions when they borrow reserves directly from the Bank of Canada is the

The Bank of Canada is said to be the "lender of last resort" in that

The quantity theory of money can be written as

The transactions demand for money refers to

What are the tools available to the Governor of the bank of Canada to control the money supply? Describe in detail how each is used to increase or decrease the money supply.

If the Bank of Canada wants to target a rate of growth of the money supply faster than what currently exists,it must

Figure 14-2 -In Figure 14-2,what is the value of the long run equilibrium real GDP?

The central bank for Canada is

Suppose the economy is initially in long-run and short-run equilibrium.If the Bank of Canada decides to pursue a contractionary monetary policy,we will see

The Nature of Economics

Production Possibilities and Economic Systems

Demand and Supply

Introduction to Macroeconomics

Measuring the Economys Performance

Modelling Real Gdp and the Price Level in the Long Run

Economic Growth and Development

Modelling Real Gdp and the Price Level in the Short Run

Consumption, investment, and the Multiplier

The Public Sector

Fiscal Policy and the Public Debt

Money and the Banking System

Money Creation and Deposit Insurance

Issues in Stabilization Policy

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters