When the Central Bank increases the money supply, interest rates fall and consumers spend more. Select one: True False

The inflation target rate is usually around 2% Select one: True False When the Central Bank increases the money supply, interest rates fall and consumers spend more. Select one: True False

According to the Taylor Rule, if inflation rises by 2%, then the targeted interest rate should rise by more than 2%. Select one: True False

Maintaining a strong dollar in the international currency market is one of the primary goals of Canada's Central Bank. Select one: True False

The Bank of Canada can directly control all of the following EXCEPT Select one: a. the policy interest rate. b. the discount rate. c. the reserve requirement ratio. d. long-term interest rates.

If the Bank of Canada wanted to increase interest rates, it could Select one: a. decrease the reserve requirement or implement an open market sale. b. decrease the reserve requirement or implement an open market purchase. c. increase the reserve requirement or implement an open market purchase. d. increase the reserve requirement or implement an open market sale.

In the short-run period, the central Bank can influence the level of interest rates by changing the Select one: a. supply of money through open market operations. b. demand for money through open market operations. c. currency exchange rate d. demand for money through changes in reserve requirements.

If the bank of Canada ________ bonds, interest rates will fall and the price of bonds will ________. Select one: a. buys; fall b. sells; fall c. sells; rise d. buys; rise

When the Central Bank ________ interest rates, bond prices ________. Select one: a. lowers; remain the same b. raises; rise c. lowers; rise d. raises; remain the same The exchange rate is Select one: a. the rate at which banks lend money to firms for investments. b. the velocity of transactions in the economy. c. the fluctuations of the interest rate in the economy. d. the price at which the Canadian dollar trades for the currency of another country.

An outside lag is Select one: a. the time it takes for inflation to be reduced to its target rate. b. the time it takes for real GDP to reach its potential. c. a lag in implementing policy among politicians. d. the period of time it takes for monetary policies to work in the macroeconomy

Based on the money market model, when real GDP increases, the equilibrium interest rate should Select one: a. decrease. b. increase. c. stay the same. d. increase the same percentage as the money supply increase.

If the Bank of Canada were to conduct an open market sale, it would Select one: a. decrease the money supply and decrease output. b. increase the money supply and decrease output. c. decrease the money supply and increase output. d. increase the money supply and increase output.

A depreciation of the Canadian dollar will make Canadian goods ________ to foreigners and make imported goods ________ for Canadian residents. Select one: a. cheaper; more expensive b. more expensive; cheaper c. cheaper; cheaper d. more expensive; more expensive