1 The relationship depicted in a short-run Phillips curve shows,

a. the inverse relationship between inflation and unemployment

.b. the positive relationship between inflation and unemployment

.c. the inverse relationship between a price index and unemployment

.d. the positive relationship between real GDP and unemployment.

2.Which of the following best describes an appropriate Bank of Canada policy to offset an inflationary boom?

a. Increase the target for the overnight interest rate to increase AD

.b. Increase the target for the overnight interest rate to decrease AD.

c. Decrease the target for the overnight interest rate to increase AD

.d. Decrease the target for the overnight interest rate to decrease AD.

3What happens when the money supply increases, ceteris paribus?

a. Nominal interest rates fall, and investment spending rises.

b. Nominal interest rates fall, and investment spending falls

.c. Nominal interest rates rise, and investment spending falls.

d. Nominal interest rates rise, and investment spending rises.

4.Open market purchases or sales of securities by the Bank of Canada have an ultimate impact on the money supply that is several times the amount of the purchase or sale.

a. True

b. False

5.f the Bank of Canada wishes to expand the money supply, which of the following actions will it take?

a. It will buy stocks.

b. It will sell stocks

.c. It will buy government bonds.

d. It will sell government bonds.