Homework Answers
Option C
Target inflation rate means keeping the inflation rate at a determined level by controlling the money supply. So by decreasing the money supply, the interest rate increases which reduces the inflation.
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This Question: 1 pt 1 of 10 (2 complete) The Bank of Canada and the government...
This Question: 1 pt 10 of 10 (9 complete) The Bank of Canada and the government...
This Question: 1 pt 10 of 10 (9 complete) The Bank of Canada and the government of Canada have agreed that the Bank will achieve an inflation rate target. Which arrangement, inflation targeting or unemployment targeting, would most likely provide price stability? targeting would most likely provide price stability because it would anchor the short-run tradeoff at the rate. O A. Unemployment; natural unemployment B. Inflation; natural unemployment C. Inflation ; expected inflation OD. Unemployment; expected inflation
Suppose the Bank of Canada raises the overnight loans rate. Describe the ripple effects of this...
Suppose the Bank of Canada raises the overnight loans rate. Describe the ripple effects of this monetary policy. Other short-term interest rates and the exchange rate Consumption expenditure, investment, and net exports The quantity of money and supply of loanable funds Aggregate demand Real GDP growth and the inflation rate O A. rise; increase OB. fall; decrease O c. fall; increase OD. rise; decrease O A. decreases; decrease OB. increases; decrease or remain the same O c. decreases; increase or...
It would be greatly appreciated if you can help to do the followings. Thanks! 1. 2....
It would be greatly appreciated if you can help to do the
followings. Thanks!
1.
2.
3.
4.
5.
Suppose that the liquidity effect is immediate and smaller than the other effects, and our expectations of inflation adjust quickly. Referring to the graphs on the right, choose the time path of interest rates from an increase in the growth rate of the money supply that occurs at time T." O A. GraphB O B. Graph A Interest Rate When the...
Suppose that the money demand function takes the form If output grows at rate and the...
Suppose that the money demand function takes the form If output grows at rate and the nominal interest rate is constant, at what rate will the demand for real balances grow? What is the velocity of money in this economy? If inflation and nominal interest rates are constant, at what rate, if any, will velocity grow? How will a permanent (once-and-for-all) increase in the level of interest rates affect the level of velocity? How will it affect the subsequent growth...
Question 3 This question considers long-run policies in Mexico relative to Canada. Assume Mexico's money growth...
Question 3 This question considers long-run policies in Mexico relative to Canada. Assume Mexico's money growth rate is currently 4% and its inflation rate is 2%. Canada's money growth rate is 6% with 3.25% inflation rate. The world real interest rate is 0.75%. For the following questions, use the conditions associated with the general monetary model. Treat Mexico as the home country and define the exchange rate as Mexican pesos per Canadian dollar, E/cS. a. Calculate the growth rate of...
To decrease the money supply, the Bank of Canada could O a) lower the bank rate....
To decrease the money supply, the Bank of Canada could O a) lower the bank rate. O b) lower the required reserve ratio. O c) sell government securities. d) purchase government securities. An increase in interest rate in the economy will have what effect on macroeconomic equilibrium in the long run? a) The price level will rise, and the level of output will fall. b) The price level will rise, and the level of output will be equal to the...
15. Which of the following items is assets of a bank A. loans B. checking account deposits C, saving account deposits D. money borrowed from Federal Reserve 16. In an open economy, if a country has a...
15. Which of the following items is assets of a bank A. loans B. checking account deposits C, saving account deposits D. money borrowed from Federal Reserve 16. In an open economy, if a country has a trade surplus, which is NOT correct-? A. Exports > Imports. C. Saving > Investment D. Net capital outflow> 0 17. Inflation will be reflected as the directly proportional change of A. Total money supply increase B. Nominal wage growth, but not nominal interest...
1.Suppose the Bank of Canada sells government bonds. Use a graph of the money market to...
1.Suppose the Bank of Canada sells government bonds. Use a graph of the money market to show what this does to the value of money. (6 marks) 2.Using separate graphs, demonstrate what happens to the money supply, money demand, the value of money, and the price level if: a. the Bank of Canada increases the money supply. b. people decide to demand less money at each value of money. 3.Economists agree that increases in the money supply growth rate increases...
If the Bank of Canada were to miscalculate the NAIRU (non-accelerating inflation rate of unemployment) as...
If the Bank of Canada were to miscalculate the NAIRU (non-accelerating inflation rate of unemployment) as being 10% when in fact it was 12%, it might cause O A. consumers to spend more than they intended, because the Bank of Canada misled them about the unemployment rate. O B. a reduction in the natural rate of unemployment, because it would be allowing inflation to occur. O c. a one-time reduction in unemployment, because of a one-time increase in the money...
can you answer question 15 & 16 QUESTION 15 Suppose that the Federal Reserve believes the...
can
you answer question 15 & 16
QUESTION 15 Suppose that the Federal Reserve believes the economy is growing too fast and engages in contractionary monetary policy. What happens to the money supply and interest rates in the money market? A. The money supply increases and interest rates fall. B. The money supply increases and interest rates rise. C. The money supply decreases and interest rates fall. D. The money supply decreases and interest rates rise. QUESTION 16 Suppose the...
This Question: 1 pt 10 of 10 (9 complete) The Bank of Canada and the government of Canada have agreed that the Bank will achieve an inflation rate target. Which arrangement, inflation targeting or unemployment targeting, would most likely provide price stability? targeting would most likely provide price stability because it would anchor the short-run tradeoff at the rate. O A. Unemployment; natural unemployment B. Inflation; natural unemployment C. Inflation ; expected inflation OD. Unemployment; expected inflation
Suppose the Bank of Canada raises the overnight loans rate. Describe the ripple effects of this monetary policy. Other short-term interest rates and the exchange rate Consumption expenditure, investment, and net exports The quantity of money and supply of loanable funds Aggregate demand Real GDP growth and the inflation rate O A. rise; increase OB. fall; decrease O c. fall; increase OD. rise; decrease O A. decreases; decrease OB. increases; decrease or remain the same O c. decreases; increase or...
It would be greatly appreciated if you can help to do the
followings. Thanks!
1.
2.
3.
4.
5.
Suppose that the liquidity effect is immediate and smaller than the other effects, and our expectations of inflation adjust quickly. Referring to the graphs on the right, choose the time path of interest rates from an increase in the growth rate of the money supply that occurs at time T." O A. GraphB O B. Graph A Interest Rate When the...
Question 3 This question considers long-run policies in Mexico relative to Canada. Assume Mexico's money growth rate is currently 4% and its inflation rate is 2%. Canada's money growth rate is 6% with 3.25% inflation rate. The world real interest rate is 0.75%. For the following questions, use the conditions associated with the general monetary model. Treat Mexico as the home country and define the exchange rate as Mexican pesos per Canadian dollar, E/cS. a. Calculate the growth rate of...
To decrease the money supply, the Bank of Canada could O a) lower the bank rate. O b) lower the required reserve ratio. O c) sell government securities. d) purchase government securities. An increase in interest rate in the economy will have what effect on macroeconomic equilibrium in the long run? a) The price level will rise, and the level of output will fall. b) The price level will rise, and the level of output will be equal to the...
15. Which of the following items is assets of a bank A. loans B. checking account deposits C, saving account deposits D. money borrowed from Federal Reserve 16. In an open economy, if a country has a trade surplus, which is NOT correct-? A. Exports > Imports. C. Saving > Investment D. Net capital outflow> 0 17. Inflation will be reflected as the directly proportional change of A. Total money supply increase B. Nominal wage growth, but not nominal interest...
If the Bank of Canada were to miscalculate the NAIRU (non-accelerating inflation rate of unemployment) as being 10% when in fact it was 12%, it might cause O A. consumers to spend more than they intended, because the Bank of Canada misled them about the unemployment rate. O B. a reduction in the natural rate of unemployment, because it would be allowing inflation to occur. O c. a one-time reduction in unemployment, because of a one-time increase in the money...
can
you answer question 15 & 16
QUESTION 15 Suppose that the Federal Reserve believes the economy is growing too fast and engages in contractionary monetary policy. What happens to the money supply and interest rates in the money market? A. The money supply increases and interest rates fall. B. The money supply increases and interest rates rise. C. The money supply decreases and interest rates fall. D. The money supply decreases and interest rates rise. QUESTION 16 Suppose the...
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