The action of individuals or private institutions buying a newly issued Canada Savings Bond or a treasury bill:

A) decrease the size of the government's debt. B) is a result of a government budget surplus. C) is borrowing by the government to finance a budget deficit. D) is unrelated to both government budget surpluses and deficits. Since the early 1990s the Bank of Canada has made its primary target that of:

A) keeping the unemployment rate below 4%. B) ensuring the stability of the Canadian dollar on international markets. C) keeping interest rates steady. D) controlling inflation.

What is the effect of expansionary monetary policy?

A) 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. B) 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. C) 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. D) 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.

Contractionary monetary policy results in which one of the following?

A) Higher interest rates. B) Lower interest rates. C) Higher aggregate expenditures. D) Higher real GDP.