The Bank of Canada maintains an operating band for the overnight interest rate of

Question 18 options:

50 percent of the bank rate.

50 basis points below the inflation rate.

50 basis points below the bank rate.

50 percent of the inflation rate.

From an initial long-run equilibrium, if aggregate demand grows more slowly than long-run and short-run aggregate supply, the federal government would most likely

Question 21 options:

decrease government spending

decrease taxes

decrease oil prices

increase the required reserve ratio and decrease government spending

If households and firms decide to hold less of their money in chequing account deposits and more in currency, then the money supply

Question 22 options:

will decrease.

will not change.

may increase or decrease.

will increase.

An increase in the interest rate

Question 23 options:

decreases the opportunity cost of holding money

increases the percentage yield of holding money

decreases the percentage yield of holding money

increases the opportunity cost of holding money

Suppose real GDP is $1.7 trillion, potential real GDP is $1.8 trillion, and the federal government plans to use fiscal policy to restore the economy to potential real GDP. Assuming a constant price level, the federal government would need to increase government purchases by

Question 25 options:

more than $100 billion.

None of the above is correct. The federal government must decrease government purchases in this case.

less than $100 billion.

$100 billion.

An increase in real GDP can shift

Question 26 options:

money demand to the left and decrease the equilibrium interest rate.

money demand to the left and increase the equilibrium interest rate.

money demand to the right and increase the equilibrium interest rate.

money demand to the right and decrease the equilibrium interest rate.