Exam 28: Monetary Policy in Canada

Suppose Canadian real GDP is equal to potential GDP.A significant and sustained appreciation of the Canadian dollar would likely lead the Bank to engage in a contractionary monetary policy if the Bank's policy experts traced the cause of the appreciation 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.

Suppose Canadian real GDP is equal to potential GDP.A significant and sustained appreciation of the Canadian dollar would likely lead the Bank to engage in an expansionary monetary policy if the Bank's policy experts traced the cause of the appreciation to

The interest rate that commercial banks charge each other for the shortest period of borrowing or lending is called the

Most central banks accept that,in the long run,monetary policy has an effect on

Suppose Canadian real GDP is equal to potential GDP.A significant and sustained appreciation of the Canadian dollar on the foreign-exchange market then requires the Bank of Canada to

In general,if a central bank chooses to target the interest rate in its implementation of monetary policy,then

During a period of renewed inflation fears in 1988,the governor of the Bank of Canada,Mr.John Crow,announced that monetary policy would henceforth be guided more by

Any central bank,including the Bank of Canada,can implement its monetary policy by directly influencing either ________ or ________,but not both.

The Bank of Canada's purchases and sales of government securities,when they occur,are referred to as

Which of the following goods are included in Canada's measure of "core inflation"?

In practice,the Bank of Canada implements its monetary policy by

If the Bank of Canada were required to gain approval for all changes in monetary policy from Parliament before implementing them,this would result in

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 ________.

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

An expansionary monetary policy by the Bank of Canada could include

Consider the implementation of monetary policy.One difficulty in attempting to stabilize the economy by controlling the money supply is that

Which of the following events would justify the Bank of Canada implementing an expansionary monetary policy,while maintaining its commitment to its inflation target?

If the Bank of Canada wants to influence real economic variables in the short run,it uses

Suppose output is at its potential level and then there is a sudden increase in food and energy prices.This increase