1. Of the principal capital market instruments in Canada which accounts for the largest outstanding volume: A) residential mortgages B) corporate stocks C) consumer loans6. _. Monetary policy affects aggregate demand: A) Only through the effect of higher interest rates on the standard components of demand (investment, housing etc.) B) Through the channel described in (A) as well as wealth resulting from changes in stock (share) prices. C) Through the channels described in (A) and (B) AND a number of additional channels. 7. In Canada, the term "reserves" includes financial institution deposits with the Bank of Canada and "vault cash". TRUE (mark column A) FALSE (mark column B) 8. The Bank of Canada's operating objective is to: A) maintain the overnight rate within a band of 50 basis points around their target (i.e. 0.25% above and below). B) maintain the overnight rate within a band of 100 basis points above their target (i.e. 0.5% above and below) C) maintain the overnight rate within a band of 20 basis points around their target D) Establish the prime lending rate at 2 percent above the rate of inflation11. All things equal an increase in domestic Canadian money supply relative to my supply in the United States would cause the value of the Canadian dollar against the US currency.F tn: A) Appreciate B) Depreciate C) Have no effect 14. "Real" interest rates: A) can never be negative because inflation cannot be negative B) can be negative if inflation is greater than the nominal rate C) can only be negative if inflation is negative D) can only be negative if nominal rates are negative E) can never be negative because nominal rates cannot be negative 15. Forward exchange rates refer to rates that are: A) Agreed to with respect to some specified future date B) Based on the concept of "purchasing power parity". C) Applicable to immediate transactions17. The concept of "velocity" as defined in the Quantity Theory of Money has been shown to be remarkably constant. TRUE (mark column A) FALSE (mark column B)19. An expected increase in demand for Canadian financial assets by foreigners would: A) Have no effect on the exchange rate because only goods exports matter B) Cause Canadian dollar appreciation by increasing demand for the dollar C) Cause dollar depreciation because fewer dollars would be available for imports