If there is an inflationary gap in the Canadian prairies and a recessionary gap in Ontario, what does the Bank of Canada do? O a. There are automatic stabilisers inherent in monetary policy that allow the policy to adjust to close the output gap. O b. The Bank of Canada consults with the commercial banks on the appropriate level of deposit creation for each region of the country. O c. The Bank of Canada responds to the average level of inflation in the country and implements a single monetary policy. O d. The Bank of Canada implements monetary policy in each region of Canada as required. O e. Each regional office of the Bank of Canada implements the appropriate monetary policy for that region.

If there is an inflationary gap in the Canadian prairies and a recessionary gap in Ontario, what does the Bank of Canada do? O a. There are automatic stabilisers inherent in monetary policy that allow the policy to adjust to close the output gap. O b. The Bank of Canada consults with the commercial banks on the appropriate level of deposit creation for each region of the country. O c. The Bank of Canada responds to the average level of inflation in the country and implements a single monetary policy. O d. The Bank of Canada implements monetary policy in each region of Canada as required. O e. Each regional office of the Bank of Canada implements the appropriate monetary policy for that region.

Economics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506725

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter14: Modern Macroeconomics And Monetary Policy

Section: Chapter Questions

Problem 15CQ

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Similar questions

How can a central bank decrease the money supply? O a. By selling securities O b. All of the answers are correct O c. By decreasing the target overnight interest rate O d. By engaging in "quantitative easing"
How can a commercial bank "create" money? Select one: O a. by making loans O b. by increasing the rate of inflation O c. by issuing its own Central Bank bonds O d. by selling government Treasury bills to the commercial banks O e. by selling some of its foreign-currency reserves for domestic currency
According to the monetary transmission process, what will be the effect of a decrease in the money supply? O a. A decrease in the interest rate, an increase in investment spending, and an increase in GDP. O b. An increase in the interest rate, an increase in investment spending, and an increase in GDP. O c. A decrease in the interest rate, a decrease in investment spending, and a decrease in GDP. O d. An increase in the interest rate, a decrease in investment spending, and a decrease in GDP. O e. An increase in the interest rate, an increase in investment spending, and a decrease in GDP.
If we observe a small decrease in the actual overnight interest rate over a several-day period, we can definitely conclude that the O a. Bank of Canada has implemented a contractionary monetary policy. O b. It is not possible to conclude any of the above. O c. Bank of Canada has implemented an expansionary monetary policy. O d. Government of Canada has reduced the money supply. O e. Bank of Canada has abandoned its inflation target.
Which from the following variables is most likely to be an intermediate target of monetary policy? (Check all that apply.) O A. Discount rate O B. Open market purchases C. Real GDP growth O D. Monetary base O E. Federal funds rate O F. Unemployment rate G. Nonborrowed reserves O H. M2 M1 O O O O O
Which set of actions could the central bank use to increase the money supply? Select one: O a. an open market purchase and a tax cut O b. a discount rate cut and an open market sale O c.a reduction in the required reserve ratio and an open market purchase O d. a reduction in the required reserve ratio and an open market sale
Assume contractionary monetary policies have had the effect of lowering inflation rates from a 6% annual rate down to 2%. What do economists call this drop in inflation? O a. Deflation. O b. Inflation. O c. Devaluation. d. Depreciation. O e. Disinflation.
According to the Taylor rule, ceteris paribus, if the actual inflation rate is above the Fed's target inflation rate, and if the growth rate of real GDP is below the long-run average growth rate, then Select one: a. the Fed would be expected to increase the Federal Funds Rate. O b. the Fed would be expected to decrease the Federal Funds Rate. O c. the Fed would be expected to decrease the money supply. O d. the Fed's behavior could not be predicted without more information.
One of the undesirable effects of contractionary monetary policy is O O A) Higher unemployment. B) Higher inflation. C) Lower net exports.
Which of the following statements about money that is correct? O A. In the United States today, money consists of currency and deposits at banks and other depository institutions. O B. Money is a completely stable store of value. OC. Credit cards and debit cards are examples of money. O D. Inflation brings a rising value of money.
The persons who are laid off when a supermarket closes because the manager did not run the business efficiently are considered to be Select one: O a. frictionally unemployed. b. seasonally unemployed. structurally unemployed. O C. d. cyclically unemployed. marginally unemployed.
The money stock measured as M1 is growing at the rate of 5% per year. If real GDP is growing at 2% per year, and the income velocity of circulation of money is constant, Select one: the economy will achieve noninflationary growth O b. the inflation rate will be around 1%. O c. the inflation rate will be around 5% O d. the inflation rate will be around 3%.