How is the major portion of the Canadian supply created? A . By the actions of...
How is the major portion of the Canadian supply created? A . By the actions of the Canadian mint. B . By the actions of the commercial banks and the bank of Canada. C. through loans from the international monetary fund.
Homework Answers
Ans) the correct option is B . By the actions of the commercial banks and the bank of Canada.
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How is the major portion of the Canadian supply
created? A . By the actions of...
Consider a simple economy in which money supply (think of M1) is determined through actions of...
Consider a simple economy in which money supply (think of M1) is determined through actions of the central bank, non-bank public, and commercial banks. Assume that the central bank influences the size of the monetary base and the public and commercial banks decide on the value of deposits and excess reserves. i) Imagine that in a given point in time the value of the monetary base is equal to 100, the public chooses not to hold any currency, and commercial...
Fill in the blanks to make the following statements correct. a The interest rate that commercial...
Fill in the blanks to make the following statements correct. a The interest rate that commercial banks charge each other for overnight loans is called the overnight interest rate. b. The bank rate is 50 basis points above the target overnight interest rate. At this interest rate, the Bank stands ready to lend any amount to commercial banks. At a rate 50 basis points below the target, the Bank stands ready to accept deposits from commercial banks (and pay that...
How do the Bank of Canada's actions change the exchange rate? When the Bank of Canada...
How do the Bank of Canada's actions change the exchange rate? When the Bank of Canada lowers the overnight loans rate, the Canadian interest rate differential and other things remaining the same, the Canadian dollar O A falls; depreciates O B. fallis; appreciates OC rises, appreciates OD. rises depreciates
Problem #4 Consider a simple economy in which money supply (think of M1) is determined through...
Problem #4 Consider a simple economy in which money supply (think of M1) is determined through actions of the central bank, non-bank public, and commercial banks. Assume that the central bank influences the size of the monetary base and the public and commercial banks decide on the value of deposits and excess reserves. i)Imagine that in a given point in time the value of the monetary base is equal to 100, the public chooses not to hold any currency, and...
If the reserve ratio decreased from 20 percent to 10 percent, which of the following would...
If the reserve ratio decreased from 20 percent to 10 percent, which of the following would happen to the money multiplier? a. It would rise from 10 to 20. b. It would rise from 5 to 10. c. It would fall from 10 to 5. d. It would fall from 20 to 5. 13. Which statement best describes the outcome of a decrease in the bank rate? a. Banks will borrow less from Bank of Canada, so reserves increase. b....
1) A commercial banks liabilities consist of Select one: A. the demand deposits it has created....
1) A commercial banks liabilities consist of Select one: A. the demand deposits it has created. B. funds kept to meet key reserve requirements. C. promises to pay made by bank borrowers (IOUs). D. equity capital contributed by the banks shareholders. 2) When an insurance company receives money from policyholders, it can Select one: A. create more money than it takes in. B. lend the money and increase monetary circulation. C. lend only up to 10% of the money it...
14. a. If the Bank of Canada wanted to decrease the money supply, the Bank would...
14. a. If the Bank of Canada wanted to decrease the money supply, the Bank would buys bonds from the Chartered Banks. (Primary dealers) b. decreases the fixed operating band for overnight lending. decreases the bank rate. d. sells government securities to the Chartered Banks. (Primary dealers) provides more loans to the Chartered Banks through the Standing Liquidity Facility. c. e. 15. The Bank of Canada purchases $5 million worth of government securities (government bonds) from the Chartered Banks. The...
9 In the U.S econormy the money supply is cot A) U.S Treasury. B) Federal Reserve...
9 In the U.S econormy the money supply is cot A) U.S Treasury. B) Federal Reserve System D) Senate Committee on Banking and Finance. 10. Ceteris paribus, if the Fed raised the required reserve ratio A) Banks could increase their lending B) The Federal funds interest rate would rise. The size of the monetary multiplier would decrease. D) The size of the monetary multiplier would increase. 11. Money is created when A) Loans are made. Checks written on one bank...
Describe the channels by which monetary policy ripples through the economy and explain how each channel...
Describe the channels by which monetary policy ripples through the economy and explain how each channel operates. Suppose the Bank of Canada raises the overnight loans rate. When the Bank of Canada raises the overnight loans rate, it makes an open market Other short-term interest rates and the exchange rate rise. The quantity of money and the supply of loanable funds decrease The long-term real interest rate rises The higher real interest rate decreases consumption expenditure and investment. The exchange...
6. Suppose that the Bank of Canada conducts an open market purchase of $2000 from a...
6. Suppose that the Bank of Canada conducts an open market purchase of $2000 from a commercial bank. Assuming all banks’ desired reserve ratio is 0.20, or 20 percent, and currency drain ratio is 0. Answer the questions below: a. Show the effects of open market operation on Bank of Canada’s balance sheet, and commercial bank’s balance sheet. b. By how much monetary base will increase? By how much money supply will increase? c. If banks’ desired reserve ratio increases...
Fill in the blanks to make the following statements correct. a The interest rate that commercial banks charge each other for overnight loans is called the overnight interest rate. b. The bank rate is 50 basis points above the target overnight interest rate. At this interest rate, the Bank stands ready to lend any amount to commercial banks. At a rate 50 basis points below the target, the Bank stands ready to accept deposits from commercial banks (and pay that...
How do the Bank of Canada's actions change the exchange rate? When the Bank of Canada lowers the overnight loans rate, the Canadian interest rate differential and other things remaining the same, the Canadian dollar O A falls; depreciates O B. fallis; appreciates OC rises, appreciates OD. rises depreciates
Problem #4 Consider a simple economy in which money supply (think of M1) is determined through actions of the central bank, non-bank public, and commercial banks. Assume that the central bank influences the size of the monetary base and the public and commercial banks decide on the value of deposits and excess reserves. i)Imagine that in a given point in time the value of the monetary base is equal to 100, the public chooses not to hold any currency, and...
14. a. If the Bank of Canada wanted to decrease the money supply, the Bank would buys bonds from the Chartered Banks. (Primary dealers) b. decreases the fixed operating band for overnight lending. decreases the bank rate. d. sells government securities to the Chartered Banks. (Primary dealers) provides more loans to the Chartered Banks through the Standing Liquidity Facility. c. e. 15. The Bank of Canada purchases $5 million worth of government securities (government bonds) from the Chartered Banks. The...
9 In the U.S econormy the money supply is cot A) U.S Treasury. B) Federal Reserve System D) Senate Committee on Banking and Finance. 10. Ceteris paribus, if the Fed raised the required reserve ratio A) Banks could increase their lending B) The Federal funds interest rate would rise. The size of the monetary multiplier would decrease. D) The size of the monetary multiplier would increase. 11. Money is created when A) Loans are made. Checks written on one bank...
Describe the channels by which monetary policy ripples through the economy and explain how each channel operates. Suppose the Bank of Canada raises the overnight loans rate. When the Bank of Canada raises the overnight loans rate, it makes an open market Other short-term interest rates and the exchange rate rise. The quantity of money and the supply of loanable funds decrease The long-term real interest rate rises The higher real interest rate decreases consumption expenditure and investment. The exchange...
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