Monetary policy refers to the actions the central bank takes to manage

Question 1 options:

a)

the money supply and interest rates to pursue its economic objectives.

b)

the money supply and income tax rates to pursue its economic objectives.

c)

income tax rates and interest rates to pursue its economic objectives.

d)

government spending and income tax rates to pursue its economic objectives.

Question 2 (1 point) What is net tax revenue in excess of government spending on goods and services called? Question 2 options:

a)

Transfer payments.

b)

A budget deficit.

c)

A budget surplus.

d)

Gross tax revenue.

Question 3 (1 point) What is the bank rate?

Question 3 options:

a)

The rate of interest that a commercial bank charges its best customers for a loan.

b)

The rate of interest that a commercial bank pays its best customers for their savings.

c)

The rate of interest that the Bank of Canada pays commercial banks for their deposits.

d)

The rate of interest that the Bank of Canada charges a commercial bank for a loan.

Question 4 (1 point) In Canada, who controls the supply of money?

Question 4 options:

a)

Canadian Chartered Banks.

b)

The Department of Finance.

c)

The Bank of Canada.

d)

The market.

Question 5 (1 point) All of the following except one are functions of the Bank of Canada. Which is the exception?

Question 5 options:

a)

It is the sole issuer of currency.

b)

It is the regulator of the money supply.

c)

It ensures that the commercial banks remain profitable.

d)

It is auditor and inspector of the commercial banks.

Question 6 (1 point) The most important function of the Bank of Canada is to regulate the money supply. Question 6 options: a) True b) False Question 7 (1 point) What is an appropriate reason for the government to borrow money? Question 7 options:

a)

To discourage waste in fiscal affairs.

b)

To compensate for a lower bond rating.

c)

To encourage foreign ownership of the debt.

d)

To inject new spending into the economy.

Question 8 (1 point) What is the purpose of the Bank of Canada?

Question 8 options:

a)

It acts as a financial agent for the federal government.

b)

All of these.

c)

It supplies the economy with currency.

d)

It acts as auditor and inspector of the commercial banks.

Question 9 (1 point) A recession often begins with a(n) ________ in spending by firms on capital goods and a(n) ________ in spending on durable goods by households.

Question 9 options:

a)

decrease; increase

b)

decrease; decrease

c)

increase; increase

d)

increase; decrease

Question 10 (1 point) An interest rate above equilibrium will lead to a surplus of money. Question 10 options: a) True b) False

n 11 (1 point) An increase in individual income taxes, ________ disposable income, which ________ spending (consumption).

Question 11 options:

a)

increases; increases

b)

increases; decreases

c)

decreases; decreases

d)

decreases; increases

Question 12 (1 point) Which of the following statements is correct regarding an interest rate above equilibrium?

Question 12 options:

a)

It is the normal state of affairs.

b)

It is a result of people demanding too much money.

c)

It will result in a shortage of money in the money market.

d)

It will result in a surplus of money in the money market.

Question 13 (1 point) Fiscal policy is defined as changes in federal ________ and ________ to achieve macroeconomic objectives such as high rates of economic growth, and high employment.

Question 13 options:

a)

taxes; the money supply

b)

interest rates; money supply

c)

taxes; expenditures

d)

taxes; interest rates

Question 14 (1 point) Which of the following is one of the important routine functions of the Bank of Canada?

Question 14 options:

a)

To advise commercial banks as to the most profitable ways of reinvesting profits.

b)

To supply the economy with currency.

c)

To help new commercial banks sell securities.

d)

To help commercial banks establish good financial arrangements with foreign banks.

Question 15 (1 point) Which of the following would help eliminate a recessionary gap? Question 15 options:

a)

All of these

b)

An increase in exports

c)

An increase in government spending

d)

An increase in investment

16 (1 point) What is the effect of an increase in the money supply?

Question 16 options:

a)

It will decrease the demand for money.

b)

It will decrease the quantity of investment spending.

c)

It will increase the interest rate.

d)

It will lower the interest rate.

Question 17 (1 point) Bank rate serves as the basis for establishing the chartered banks' prime interest rates.

Question 17 options: a) True b) False Question 18 (1 point) Chartered banks are the largest and most important financial institutions in Canada. Question 18 options: a) True b) False Question 19 (1 point) How is the Bank of Canada able to affect the supply of money?

Question 19 options:

a)

By influencing the level of bank reserves.

b)

By emphasizing importance of financial literacy for Canadian.

c)

By using fiscal policy effectively.

d)

By controlling the number of banks allowed to carry on business.

Question 20 (1 point) Following is NOT a measure of Supply Side of a government policy

Question 20 options:

a)

trade union reform

b)

increasing spending on education and training

c)

increasing the interest rate through the central bank

d)

increasing spending on infrastructure

uestion 21 (1 point)

Refer to the information above to answer this question. If the supply of money is $130, what is the value of the equilibrium interest rate?

Question 21 options:

a)

8%

b)

7%

c)

4%

d)

5%

Question 22 (1 point) What is fiscal policy?

Question 22 options:

a)

It is the central bank's approach to interest rate policy.

b)

It is the government's approach to its own spending and taxation.

c)

It is the total spending by all levels of government.

d)

It is the use of interest rate policy by the central bank to stabilize an economy.

Question 23 (1 point) What is government spending on goods and services in excess of net tax revenue called? Question 23 options:

a)

A budget deficit.

b)

Monetizing the debt.

c)

Pro-cyclical fiscal policy.

d)

A budget surplus.

Question 24 (1 point) In the case study "Problems Facing the Turkish Economy," the three major problems faced by the country are

Question 24 options:

a)

a rising tax rate, a growing spending by the government and declining exports

b)

a rising tax rate, a growing spending by the government and declining imports

c)

a declining tax rate, a growing spending by the government and declining imports

d)

a rising inflation rate, a growing current account deficit and declining exports

Question 25 (1 point) The interest rate can be thought of as which of the following?

Question 25 options:

a)

As a result of the level of saving.

b)

As a result of the level of investment.

c)

As a reflection of the supply of money.

d)

As the price of money.

ion 26 (1 point) What happens if the Bank of Canada decreases the money supply?

Question 26 options:

a)

The bank rate will increase because of a surplus of money.

b)

The bank rate will decrease because of a shortage of money.

c)

The bank rate will decrease because of a surplus of money.

d)

The bank rate will increase because of a shortage of money.

Question 27 (1 point) What is the relationship between the economic policies of the Bank of Canada and those of the federal government?

Question 27 options:

a)

They usually have similar goals concerning the direction to move the economy.

b)

They are usually in conflict.

c)

They are both controlled by the nation.

d)

They are always unrelated.

Question 28 (1 point) If the Bank of Canada wants to increase the money supply, it can sell government securities. Question 28 options: a) True b) False Question 29 (1 point) Which of the following is true about the Bank of Canada?

Question 29 options:

a)

It is the bankers' bank.

b)

All of these.

c)

It is state-owned.

d)

It the sole issuer of the economy's currency.

Question 30 (1 point) The action of individuals or private institutions buying a newly issued Canada Savings Bond or a treasury bill:

Question 30 options:

a)

decrease the size of the government's debt.

b)

is borrowing by the government to finance a budget deficit.

c)

is unrelated to both government budget surpluses and deficits.

d)

is a result of a government budget surplus.

uestion 31 (1 point) In the figure below, a movement from point A to point B along the demand curve would be caused by

Question 31 options:

a)

an increase in the interest rate.

b)

an decrease in taxes.

c)

a decrease in real GDP.

d)

a decrease in the price level.

Question 32 (1 point) Rising prices erode the value of money as a ________ and as a ________.

Question 32 options:

a)

unit of barter; unit of account

b)

medium of exchange; store of value

c)

store of value; unit of barter

d)

store of value; unit of liquidity

Question 33 (1 point) How is the equilibrium rate of interest in the money market determined?

Question 33 options:

a)

By the intersection of the supply of money and the total demand for money.

b)

By the intersection of the supply of money and the asset demand for money.

c)

By the intersection of the supply of money and the transactions demand for money.

d)

By the intersection of aggregate expenditures and the total demand for money.

Question 34 (1 point) Higher interest rates may lower down the net export of a country.

Question 34 options: a) True b) False Question 35 (1 point) Calculate the unemployment and inflation rates for 2018

Year

Price Index

Unemployment (in millions)

2015

120

-

2016

122.4

38.4

2017

126.1

25.6

2018

133.7

19.2

2019

147.1

14.4

2020

170.6

9.6

Question 35 options:

a)

Unemployment rate= 4.5%, Inflation rate = 10%

b)

Unemployment rate= 6%, Inflation rate = 6%

c)

Unemployment rate= 12%, Inflation rate = 2%

d)

Unemployment rate= 8%, Inflation rate = 3%

stion 36 (1 point) What is the Bank of Canada?

Question 36 options:

a)

A state-owned central bank, whose basic goal is to control the money supply and thereby help to promote general economic welfare.

b)

A state-owned central bank, whose basic goal is to provide income for the Government of Canada.

c)

A privately-owned central bank, whose basic goal is to earn profits for its owners.

d)

A privately-owned central bank, whose basic function is to minimize the risk for commercial banks in order to make them reasonably secure and profitable.

Question 37 (1 point) Suppose that the government's total tax receipts are $130, government spending on goods and services is $100 and transfer payments (public expenditures) are $40. What is the government's budget surplus or deficit?

Question 37 options:

a)

A surplus of $30.

b)

A deficit of $30.

c)

A surplus of $10.

d)

A deficit of $10.

Question 38 (1 point) What is the effect of expansionary monetary policy?

Question 38 options:

a)

An increase in the money supply leading to an increase in the interest rate, and a decrease in investment spending, causing a decrease in GDP.

b)

An increase in the money demand leading to an increase in the interest rate, and an increase in investment spending, causing an increase in GDP.

c)

An increase in the money supply leading to a decrease in the interest rate, and an increase in the quantity of investment spending, causing an increase in GDP.

d)

An increase in the money supply leading to an increase in the interest rate, and an increase in investment spending, causing an increase in GDP.

Question 39 (1 point) ___________ determines the supply of money.

Question 39 options:

a)

The tax rate

b)

The level of nominal income

c)

The demand for money

d)

The Bank of Canada

Question 40 (1 point) The current high level of inflation in Canada is mainly due to supply issues such as shortages of auto parts & consumer goods, etc.

Question 40 options: a) True b) False Question 41 (1 point) Contractionary monetary policy results in which one of the following?

Question 41 options:

a)

Higher aggregate expenditures.

b)

Higher interest rates.

c)

Higher real GDP.

d)

Lower interest rates.

Question 42 (1 point) Which of the following is an objective of fiscal policy?

Question 42 options:

a)

free post-secondary education for Canadians

b)

energy independence from Middle East oil

c)

discovering a cure for Alzheimer's

d)

high rates of economic growth

Question 43 (1 point) Mortgage loans are an important activity for banks, and the US banks have been very conservative relative to their Canadian counterparts.

Question 43 options: a) True b) False Question 44 (1 point) Which of the following are goals of monetary policy?

Question 44 options:

a)

price stability, economic growth, and high employment

b)

price stability, maximizing the value of the dollar relative to other currencies, and high employment

c)

price stability, economic growth, and maximizing the value of the dollar relative to other currencies

d)

maximizing the value of the dollar relative to other currencies, economic growth, and high employment

Question 45 (1 point) Tight monetary policy causes higher interest rate which leads to higher investment.

Question 45 options: a) True b) False

pls help