1)Suppose the Bank of Canada releases a policy statement today which leads people to believe that the Bank will be enacting expansionary monetary policy in the near future. Everything else held constant, the release of this statement would immediately cause the demand for Canadian assets to ________ and the Canadian dollar to ________.

A) increase; appreciate

B) decrease; appreciate

C) increase; depreciate

D) decrease; depreciate

2)Assuming the banks do not hold excess reserve. When the monetary base is equal to $200 billion, the desired reserve ratio is 0.10 and the currency ratio is equal to 0.20, the money supply is equal to ________.

A) $800 billion

B) $600 billion

C) $500 billion

D) $300 billion

3)If the desired reserve ratio is ten percent, currency in circulation is $400 billion, chequable deposits are $1000 billion, and excess reserves total $1 billion, then the money supply is ________.

A) $10000 billion

B) $4000 billion

C) $1400 billion

D) $10400 billion

3)If the Bank of Canada wants to alleviate undesired downward pressure on the overnight interest rate, it will enter into a ________.

A) Special Purchase and Resale Agreement (i.e., Repos)

B) Repurchase Agreement

C) Swap

D) Sale and Repurchase Agreement (i.e., Reverse Repos)

4)To keep inflation from falling below the target range, the Bank of Canada ________.

A) decreases the target for the overnight rate which causes the dollar to go down

B) decreases the target for the overnight rate which causes the dollar to go up

C) increases the target for the overnight rate which causes the dollar to go down

D) increases the target for the overnight rate which causes the dollar to go up