Exam 28: Monetary Policy in Canada

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)?

Most central banks in the developed countries focus their attention on

When the Bank of Canada increases the interest rate we call this a contractionary monetary policy.Why?

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.

The Bank of Canada determines the "bank rate" by setting it equal to the upper end of a 50 basis-point-range that the

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

Suppose the Canadian economy had a recessionary gap.To increase the level of desired aggregate expenditure,the Bank of Canada could

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

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

To raise short-term market interest rates,the Bank of Canada could

Because of the volatility of food and energy prices,the Bank of Canada pays more attention in the short run to changes in ________ than to changes in ________.

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

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

Suppose the Bank of Canada increases its target for the overnight interest rate by 0.25 percentage points.In this situation,the Bank will likely need to accommodate the resulting change in the demand for money by

The overnight interest rate is crucial to the Bank of Canada when it implements its monetary policy because

In the early 1980s,the Bank of Canada contracted the rate of growth of the money supply in an attempt to reduce inflation.One problem with this policy was that

If the Bank of Canada chooses to expand M2 by exactly $1 million,it could do so by

In the early 1980s,when the Bank of Canada was focusing its attention on reducing the growth rate of the money supply,an unplanned surge in ________ led to an unintended tight monetary policy which caused ________.

If we observe that the bank rate has increased,we can conclude that the

Inflation targeting