Exam 15: Part B: Interest Rates and Monetary Policy

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A bond with no expiration has an original price of $10,000 and a fixed annual interest payment of $1000.If the price of this bond decreases by $2000, the interest rate in effect will:

(Multiple Choice)

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Question 181

The monetary authorities can influence the money supply by:

(Multiple Choice)

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Question 182

The overnight lending rate is:

(Multiple Choice)

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Question 183

Refer to the above market for money diagram.The equilibrium interest rate is:

(Multiple Choice)

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Question 184

Assume that the desired reserve ratio is 10 percent and there are no excess reserves in the banking system.Also, suppose that the full-employment, non-inflationary level of GDP in this closed, private economy is $1,200. Refer to the above information.An interest rate of 2 percent is not sustainable because:

(Multiple Choice)

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Question 185

All else equal, when the Bank of Canada engages in an expansionary monetary policy, the interest rate received on government securities tends to:

(Multiple Choice)

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Question 186

If the demand for money increases and the monetary authorities want interest rates to remain unchanged, which of the following would be appropriate policy?

(Multiple Choice)

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Question 187

The two main tools of the monetary policy are:

(Multiple Choice)

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Question 188

Which one is considered a limitation of monetary policy?

(Multiple Choice)

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Question 189

The bank rate is the rate of interest at which

(Multiple Choice)

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Question 190

All else equal, an expansionary monetary policy in Canada:

(Multiple Choice)

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Question 191

The Special Purchase and Resale Agreement (SPRA), is a transaction in which:

(Multiple Choice)

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Question 192

An expansionary monetary policy reduces the supply of money.

(True/False)

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Question 193

On a diagram wherein the interest rate and the quantity of money demanded are shown on the vertical and horizontal axes respectively, the transactions demand for money can be represented by:

(Multiple Choice)

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Question 194

Which line in the above graph would best reflect the slope of the total demand for money curve?

(Multiple Choice)

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Question 195

The major purpose of the Bank of Canada buying and selling government securities in open market operations is to:

(Multiple Choice)

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Question 196

Refer to the graph below, in which D_t is the transactions demand for money, D_m is the total demand for money, and S_m is the supply of money.If the market for money is in equilibrium at a 6 percent rate of interest and the money supply increases, then S_m2 will shift to:

(Multiple Choice)

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Question 197

The reserves of the chartered banks are a(n):

(Multiple Choice)

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Question 198

Refer to the information below.If the money supply is $160, the equilibrium interest rate will be: Columns (1) and (2) indicate the transactions demand (D_t) for money and columns (1) and (3) show the asset demand (D_a) for money:

(Multiple Choice)

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Question 199

On a diagram wherein the interest rate and the quantity of money demanded are shown on the vertical and horizontal axes respectively, the asset demand for money can be represented by:

(Multiple Choice)

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Question 200

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Exam 15: Part B: Interest Rates and Monetary Policy

A bond with no expiration has an original price of $10,000 and a fixed annual interest payment of $1000.If the price of this bond decreases by $2000, the interest rate in effect will:

The monetary authorities can influence the money supply by:

The overnight lending rate is:

Refer to the above market for money diagram.The equilibrium interest rate is:

All else equal, when the Bank of Canada engages in an expansionary monetary policy, the interest rate received on government securities tends to:

If the demand for money increases and the monetary authorities want interest rates to remain unchanged, which of the following would be appropriate policy?

The two main tools of the monetary policy are:

Which one is considered a limitation of monetary policy?

The bank rate is the rate of interest at which

All else equal, an expansionary monetary policy in Canada:

The Special Purchase and Resale Agreement (SPRA), is a transaction in which:

An expansionary monetary policy reduces the supply of money.

On a diagram wherein the interest rate and the quantity of money demanded are shown on the vertical and horizontal axes respectively, the transactions demand for money can be represented by:

Which line in the above graph would best reflect the slope of the total demand for money curve?

The major purpose of the Bank of Canada buying and selling government securities in open market operations is to:

Refer to the graph below, in which Dt is the transactions demand for money, Dm is the total demand for money, and Sm is the supply of money.If the market for money is in equilibrium at a 6 percent rate of interest and the money supply increases, then Sm2 will shift to:

The reserves of the chartered banks are a(n):

Refer to the information below.If the money supply is $160, the equilibrium interest rate will be: Columns (1) and (2) indicate the transactions demand (Dt) for money and columns (1) and (3) show the asset demand (Da) for money:

On a diagram wherein the interest rate and the quantity of money demanded are shown on the vertical and horizontal axes respectively, the asset demand for money can be represented by:

Part A: Limits, Alternatives, and Choices

Part B: Limits, Alternatives, and Choices

Part A: The Market System and the Circular Flow

Part B: The Market System and the Circular Flow

Part A: Demand, Supply, and Market Equilibrium

Part B: Demand, Supply, and Market Equilibrium

Part A: Market Failures: Public Goods and Externalities

Part B: Market Failures: Public Goods and Externalities

Part A: Governments Role and Government Failure

Part B: Governments Role and Government Failure

Part A: An Introduction to Macroeconomics

Part B: An Introduction to Macroeconomics

Part A: Measuring the Economys Output

Part B: Measuring the Economys Output

Part A: Economic Growth

Part B: Economic Growth

Part A: Business Cycles, Unemployment, and Inflation

Part B: Business Cycles, Unemployment, and Inflation

Part A: Basic Macroeconomic Relationships

Part B: Basic Macroeconomic Relationships

Part A: The Aggregate Expenditures Model

Part B: The Aggregate Expenditures Model

Part A: Aggregate Demand and Aggregate Supply

Part B: Aggregate Demand and Aggregate Supply

Part A: Fiscal Policy, Deficits, Surpluses, and Debt

Part B: Fiscal Policy, Deficits, Surpluses, and Debt

Part A: Money, Banking, and Money Creation

Part B: Money, Banking, and Money Creation

Part A: Interest Rates and Monetary Policy

Part A: Long-Run Macroeconomic Adjustments

Part B: Long-Run Macroeconomic Adjustments

Part A: International Trade

Part B: International Trade

Part C: Financial Economics

Part A: The Balance of Payments and Exchange Rates

Part B: The Balance of Payments and Exchange Rates

The Economics of Developing Countries

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Refer to the graph below, in which D_t is the transactions demand for money, D_m is the total demand for money, and S_m is the supply of money.If the market for money is in equilibrium at a 6 percent rate of interest and the money supply increases, then S_m2 will shift to:

Refer to the information below.If the money supply is $160, the equilibrium interest rate will be: Columns (1) and (2) indicate the transactions demand (D_t) for money and columns (1) and (3) show the asset demand (D_a) for money: