Exam 28: Monetary Policy in Canada

It might take a while before the effects of changes in monetary policy are realized in the economy because it takes considerable time for

When the Bank of Canada enters the open market and buys or sells government securities,we refer to this as

To remove an inflationary gap,the Bank of Canada would probably seek to

In an effort to maintain inflation at its targeted level the Bank of Canada designs its policies,in the short run,to

The diagrams below illustrate two alternative approaches to implementing monetary policy.The economy begins in monetary equilibrium with the interest rate equal to 2% and the money supply equal to . FIGURE 28-1 Refer to Figure 28-1.If the Bank of Canada raises the target interest rate to 3%,as shown in part (i),then it must accommodate the resulting ________ in quantity of money demanded by ________ in financial markets.

In Canada,what are "open-market operations"?

Suppose the Bank of Canada's announced target for the overnight interest rate is 2.75%.Why should we expect commercial banks to borrow and lend overnight funds at a rate very close to this target?

In 2007 and 2008,Canada was affected by the global financial crisis that had begun with the U.S.housing collapse.What actions did the Bank of Canada take between the fall of 2007 and the end of 2008 in an attempt to maintain the level of economic activity in Canada? The Bank of Canada

The best description of the cause-and-effect chain of an expansionary monetary policy is that it will

The economic variables that the Bank of Canada tries to influence are ________ in the short run and ________ in the long run.

Suppose the Bank of Canada lowers its target for the overnight interest rate and longer-term interest rates in the market fall as a result.When this occurs,the commercial banks respond to

Which of the following statements about inflation targeting is correct? Inflation targeting

In 2007 and 2008,Canada was affected by the global financial crisis that had begun with the U.S.housing collapse.By 2009,the Canadian economy had entered a recession,largely due to a reduction in investment and a ________.The policy objective for the Bank of Canada and the government at this time was to ________.

Given its existing policy regime of "inflation targeting," the Bank of Canada would likely react to a large positive aggregate demand shock by

In the short run,the Bank of Canada aims to ________,in an effort to ________.

During the period of economic recovery between 1983 and 1987,the main challenge for the Bank of Canada was to

Suppose the Bank of Canada announces its target for the overnight interest rate at 2.5%.In that case,the Bank of Canada is willing to lend to commercial banks at ________% and is willing to pay ________% on deposits it receives from commercial banks.

Most central banks,including the Bank of Canada,implement monetary policy by

What is the policy response by the Bank of Canada to an inflationary gap in one region of Canada (e.g.the West)when at the same time a recessionary gap exists in another region of Canada (e.g.Ontario)?

The decision by the Bank of Canada and many other central banks to target the rate of inflation partly reflects the evidence of the