Exam 15: Part B: Interest Rates and Monetary Policy

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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.The equilibrium interest rate in this economy is:

(Multiple Choice)

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Question 81

A decline in the equilibrium level of GDP is most likely to be caused by:

(Multiple Choice)

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Question 82

If there is an increase in nominal GDP, we would expect:

(Multiple Choice)

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Question 83

If in the market for money the quantity of money demanded exceeds the money supply, we would expect the interest rate to:

(Multiple Choice)

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Question 84

The following information for a bond having no expiration date: bond price = $1,000; bond fixed annual interest payment = $100; bond annual interest rate = 10 percent.Refer to the above information.If the price of this bond increases to $1,250, the interest rate in effect will:

(Multiple Choice)

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Question 85

An expansionary monetary policy will decrease net exports.

(True/False)

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Question 86

If the monetary authorities want to reduce chartered bank lending they should:

(Multiple Choice)

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Question 87

If the monetary authority wished to follow a restrictive monetary policy, it would buy government securities in the open market.

(True/False)

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Question 88

Monetary policy is subject to less political pressure than fiscal policy.

(True/False)

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Question 89

The impact of monetary policy upon investment spending may be weakened:

(Multiple Choice)

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Question 90

Which of the following statements best describes the Bank of Canada? It is:

(Multiple Choice)

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Question 91

Refer to the above information.All else equal, the transaction demand for money in this table would increase if:

(Multiple Choice)

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Question 92

The Bank of Canada can use three instruments--Open-market operations, tax collection, and bank rate-to influence the chartered banks' reserves.

(True/False)

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Question 93

A decrease in the rate of interest would:

(Multiple Choice)

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Question 94

The strengths of monetary policy compared to fiscal policy are generally thought to include all of the following except greater:

(Multiple Choice)

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Question 95

A consumer holds money to meet spending needs.This would be an example of the:

(Multiple Choice)

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Question 96

Which of the following statements is correct? Other things being equal:

(Multiple Choice)

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Question 97

Refer to the above information.The total demand for money curve in this market for money would graph as a:

(Multiple Choice)

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Question 98

Refer to the graph given below. In the above graph, D_t represents the transactions demand for money, D_m represents the total demand for money, and S_m represents the supply of money.The transactions demand for money in this market is:

(Multiple Choice)

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Question 99

In recent years, the Bank of Canada has:

(Multiple Choice)

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Question 100

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Exam 15: Part B: Interest Rates and Monetary Policy

A decline in the equilibrium level of GDP is most likely to be caused by:

If there is an increase in nominal GDP, we would expect:

If in the market for money the quantity of money demanded exceeds the money supply, we would expect the interest rate to:

The following information for a bond having no expiration date: bond price = $1,000; bond fixed annual interest payment = $100; bond annual interest rate = 10 percent.Refer to the above information.If the price of this bond increases to $1,250, the interest rate in effect will:

An expansionary monetary policy will decrease net exports.

If the monetary authorities want to reduce chartered bank lending they should:

If the monetary authority wished to follow a restrictive monetary policy, it would buy government securities in the open market.

Monetary policy is subject to less political pressure than fiscal policy.

The impact of monetary policy upon investment spending may be weakened:

Which of the following statements best describes the Bank of Canada? It is:

Refer to the above information.All else equal, the transaction demand for money in this table would increase if:

The Bank of Canada can use three instruments--Open-market operations, tax collection, and bank rate-to influence the chartered banks' reserves.

A decrease in the rate of interest would:

The strengths of monetary policy compared to fiscal policy are generally thought to include all of the following except greater:

A consumer holds money to meet spending needs.This would be an example of the:

Which of the following statements is correct? Other things being equal:

Refer to the above information.The total demand for money curve in this market for money would graph as a:

Refer to the graph given below. In the above graph, Dt represents the transactions demand for money, Dm represents the total demand for money, and Sm represents the supply of money.The transactions demand for money in this market is:

In recent years, the Bank of Canada has:

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 given below. In the above graph, D_t represents the transactions demand for money, D_m represents the total demand for money, and S_m represents the supply of money.The transactions demand for money in this market is: