The National Bank of Anywhere desires to hold 20 percent reserves and has excess reserves of $40 000. What is the maximum amount of additional loans that the bank can extend?

1. $40 000
2. $8000
3. $200 000
4. $32 000

If Brazil is selling steel in Canada below what it cost them to produce and Canada decides to retaliate with duties, what argument is being made in favour of trade protection?

1. anti-dumping
2. infant industry
3. domestic unemployment
4. national security

Other things being constant, if the public decides to hold more money in the form of currency rather than chequing deposits, what will be the effect on bank reserves and M2?

1. Bank reserves will increase, and M2 will ultimately also decline.
2. Bank reserves will decline, and M2 will ultimately also increase.
3. Bank reserves will increase, and M2 will ultimately also increase.
4. Bank reserves will decline, and M2 will ultimately also decline.

What effect will expansionary monetary policy tend to have on the money supply and interest rates?

1. It will tend to decrease the money supply and lower interest rates.
2. It will tend to increase the money supply and lower interest rates.
3. It will tend to decrease the money supply and increase interest rates.
4. It will tend to increase the money supply and increase interest rates.

Suppose the exchange rate between British pounds and Canadian dollars is originally $1.50 per pound. If it then changes to $2 for 1 pound, what will happen to the price of Canadian goods for British importers?

1. The price will rise.
2. The price will fall.
3. The price will change in an indeterminate direction.
4. The price will stay the same.

Costa Rica can produce either 18 oranges or 9 watermelons a day, while Panama can produce either 16 oranges or 4 watermelons a day. Which of the following best describes the situation in terms of trade between the two countries are established as 1 watermelon for 4 oranges?

1. It is in the interest of both countries to specialize and trade with one another.
2. There is no incentive for Costa Rica or Panama to specialize and trade with one another.
3. It is in the interest of Panama to grow oranges and trade for watermelons.
4. There is no incentive for Panama to engage in international specialization and trade with Costa Rica.

Suppose the federal government buys $10 million worth of automobiles. If the MPC is 2/3, what will be the impact on aggregate demand, other things being equal?

1. Aggregate demand will increase $3.33 million.
2. Aggregate demand will increase $15 million.
3. Aggregate demand will increase $6.67 million.
4. Aggregate demand will increase $30 million.

If consumers in Europe and Asia develop strong preference for Canadian goods, what will be the impact on Canada's current account?

1. It will move toward deficit since purchases of Canadian goods by foreigners are counted as payment items in our current account.
2. It will not be affected since purchases of Canadian goods by foreigners are recorded in the capital account.
3. It will not be affected since purchases of Canadian goods based on mere preference are recorded under statistical discrepancy.
4. It will move toward surplus since purchases of Canadian goods are recorded as receipt items on our current account.

Which of the following statements is the most accurate in terms of comparing fiscal policy with monetary policy as a means of attaining macroeconomic goals?

1. The effects of monetary and fiscal policy are both immediate.
2. The effects of monetary policy are certain and predictable, while the effects of fiscal policy are not.
3. It takes a long time for fiscal policy to have an effect on the economy, but the effects of monetary policy are immediate.
4. The implementation of monetary policy is not slowed down by the budgetary process that can slow down the implementation of fiscal policy.

If government increases its purchases by $10 billion and the MPC is 0.9, what will be the resulting increase in the consumption component of AD?

1. $9 billion
2. $100 billion
3. $1 billion
4. $90 billion