What is the effect of an increase in the money supply?

Question 11 options:

a)	It will decrease the demand for money.

b)	It will increase the interest rate.

c)	It will lower the interest rate.

d)	It will decrease the quantity of investment spending.

Question 12 (1 poin

Which of the following is one of the important routine functions of the Bank of Canada?

Question 12 options:

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

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

c)	To help new commercial banks sell securities.

d)	To supply the economy with currency.

Question 13 (1 point)

Which of the following statements is correct regarding an interest rate above equilibrium?

Question 13 options:

a)	It is a result of people demanding too much money.

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

c)	It is the normal state of affairs.

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

Question 14 (1 point)

What is an appropriate reason for the government to borrow money?

Question 14 options:

a)	To discourage waste in fiscal affairs.

b)	To encourage foreign ownership of the debt.

c)	To inject new spending into the economy.

d)	To compensate for a lower bond rating.

Question 15 (1 point)

An increase in individual income taxes, ________ disposable income, which ________ spending (consumption).

Question 15 options:

a)	decreases; decreases

b)	increases; increases

c)	decreases; increases

d)	increases; decreases

Question 16 (1 point)

If the Bank of Canada wants to increase the money supply, it can sell government securities.

Question 16 options:

	a) True
	b) False

Question 17 (1 point)

All of the following except one are functions of the Bank of Canada. Which is the exception?

Question 17 options:

a)	It is auditor and inspector of the commercial banks.

b)	It ensures that the commercial banks remain profitable.

c)	It is the sole issuer of currency.

d)	It is the regulator of the money supply.

Question 18 (1 point)

Which of the following would help eliminate a recessionary gap?

Question 18 options:

a)	All of these

b)	An increase in exports

c)	An increase in investment

d)	An increase in government spending

Question 19 (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 19 options:

a)	taxes; expenditures

b)	taxes; interest rates

c)	taxes; the money supply

d)	interest rates; money supply

Question 20 (1 point)

Contractionary monetary policy results in which one of the following?

Question 20 options:

a)	Higher real GDP.

b)	Lower interest rates.

c)	Higher interest rates.

d)	Higher aggregate expenditures.