QUESTION 7

The size of the inflationary gap is:

1. a.the amount by which the AS must decrease to eliminate the gap
2. b.the amount by which the AD must increase to eliminate the gap
3. c.The amount by which the equilibrium GDP is above the full employment GDP
4. d.the amount by which full employment GDP is above the equilibrium GDP

QUESTION 10

The three main tools of monetary policy are

a.tax rate changes, changes in government expenditures, and the bank rate

b.tax rate changes, the bank rate, and government deposit shifting

c.open-market operations, switching Government of Canada deposits and the bank rate.

d.changes in government expenditures, the bank rate, and tax rate changes

QUESTION 17

The interest rate at which the Bank of Canada lends to chartered banks is called

1. a.the short-term rate
2. b.the bank rate.
3. c.the government bonds rate

d.the prime rate

QUESTION 19

Since World War II, several factors have contributed to the rapid growth of international trade.These factors are:

1. a.transportation technology, general increase in tariffs, and differences among nations in terms of production cost
2. b.transportation and communications technologies, and the general decline in the level of tariffs
3. c.communication technology, general increase in the level of tariffs, and the transportation technology
4. d.transportation technology, reductions in the number of participants, and the general increase in the level of tariffs

QUESTION 26

The major purpose of the Bank of Canada buying and selling government securities in open market operations is to:

1. a.raise money for government spending
2. b.achieve the desired interest rate.
3. c.raise money for a future tax cut
4. d.reduce the amount of government securities it holds

QUESTION 27

In the consolidated balance sheet of the Bank of Canada, chartered bank reserves held by the Bank of Canada are:

1. a.an asset of the Bank of Canada and chartered banks
2. b.a liability of the Bank of Canada and chartered banks
3. c.an asset of the chartered banks and a liability for the Bank of Canada
4. d.) a liability of the chartered banks and an asset for the Bank of Canada