When the Bank of Canada conducts an open market operation by purchasing securities from the public, _________________.

bank deposits increase but bank reserves do not change
bank deposits increase and bank reserves decrease
bank reserves increase
government deposit shifting decreases

The money multiplier ________________.

is greater for M1 than for M2+
is equal to the quantity of money divided by the change in monetary base
increases when the currency drain increases
decreases when the currency drain increases

Other things remaining the same, a _______ in the interest rate results in a _______________.

fall; decrease in the quantity of money demanded
fall; rise in the exchange rate
rise; rise in the exchange rate
rise; increase in the quantity of money demanded

The ripple effects which occur when the Bank of Canada sells government of Canada securities in the open market include ____________________.

an increase in short-run aggregate supply
an increase in net exports
a decrease in interest rates
a decrease in consumption and investment

If the Canadian economy is below full-employment, The Bank of Canada can reduce unemployment by conducting an open market operation in which it _______ government securities. If the economy is above full-employment, the Bank of Canada can lower inflation by conducting an open market operation in which it _______ government securities.

sells; sells
sells; buys
buys; sells
buys; buys

If the bank of Canada targets the interest rate rather than the quantity of money, the Bank _____________.

uses only the bank rate as its monetary tool
no longer conducts open market operations as its monetary tool
uses only government deposit switching as its monetary tool
changes the quantity of money supplied in response to changes in the demand for money

If the Bank of Canada targets the quantity of money, ___________________.

the exchange rate remains constant
the supply of real money curve is horizontal
the interest rate fluctuates
the demand for real money is constant

_________________ have served as governors of the Bank of Canada.

Gerald Bouey, John Turner, and Gordon Thiessen
John Crow, Gordon Thiessen, and Paul Martin
John Crow, Paul Martin, and Louis Rasminsky
Gerald Bouey, Graham Towers, and Gordon Thiessen

The first effect of monetary policy is a change in the ______________.

inflation rate
exchange rate
interest rate
unemployment rate

To reduce inflation in the early 1980s and early 1990s, the Bank of Canada _________.

increased income taxes
increased the money supply
decreased interest rates
increased interest rates

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