The monetary base will increase if ________________ increase.

saving by the public
government securities owned by the Bank of Canada
chartered banks' deposits at the Bank of Canada
bank notes held by the Bank of Canada

Following an open market operation, the Bank of Canada's assets increase by $5 million and its liabilities increase by $5 million. These changes are indicative of an open market ______________.

purchase by a chartered bank
sale by the Bank of Canada
sale by either a chartered bank or the public
purchase by the public

The Bank of Canada sells $50 million of government securities to the Bank of Montreal. As a result, the Bank of Canada's assets will ______________ and its liabilities will __________. The Bank of Montreal's assets will _____________ and its liabilities will ___________.

decrease by $50 million; not change; increase by $50 million; not change
increase by $50 million; decrease by $50 million; not change; not change
decrease by $50 million; decrease by $50 million; not change; not change
not change; not change; increase by $50 million; decrease by $50 million

If an increase in the monetary base of $8 billion increases money supply by $64 billion, then the money multiplier is equal to ________.

$64 billion
1/8
8
$8 billion

The _______ the currency drain, the ________________.

smaller; larger the deposit multiplier
smaller; smaller is the money multiplier
greater; smaller is the money multiplier
greater; larger is the deposit multiplier

Suppose that the Bank of Canada conducts an open market operation that results in the chartered banks having excess reserves of $100,000. If the currency drain is 20 percent and the desired reserve ratio is 10 percent, then at the end of the first round, total deposits will have increased by ____________ and at the end of the second round total deposits will have increased by ____________.

$20,000, $34,400
$100,000; $190,000
$80,000; $137,600
$80,000; $57,600

If the Bank of Canada fears inflation will increase, the Bank will undertake an open market _________ of securities and the money supply will ____________.

purchase; increase
sale; increase
sale; decrease
purchase; decrease

When the Bank of Canada sells securities in the open market, the foreign exchange value of the Canadian dollar _________ and _________.

falls; aggregate demand decreases
falls; the increase in exports exceeds the increase in imports
rises; net exports decrease
rises; aggregate demand increases

Suppose that the Canadian economy is at a below full-employment equilibrium. To reduce the amount of unemployment, the Bank of Canada can conduct an open market _________ of securities. Aggregate demand will ________ and the price level will _______.

sale; decrease; fall
purchase; decrease; fall
purchase; increase; rise
sale; increase; rise

When the short-term interest rate rises relative to the long-term interest rate, Canadian real GDP growth usually ___________.

increases within a month
increases about one year later
slows about one year later
slows within a month

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