ECON 1100 EXAM 4 WITH WELL VERIFIED
QUESTIONS AND ANSWERS|| GUARANTEED
PASS || ALREADY GRADED A+ || LATEST
VERSION 2025
The goals of monetary policy tend to be interrelated. For example, when the
Bank of Canada pursues the goal of ________, it also can achieve the goal of
________ simultaneously.
A) high employment; economic growth
B) high employment; lowering government spending
C) economic growth; a low current account deficit
D) stability of financial markets; a low current account deficit - ANSWER-A
The Bank of Canada's two main ________ are the money supply and the
interest rate.
A) monetary policy targets
B) policy tools
C) fiscal policy targets
D) fiscal tools - ANSWER-A
The Bank of Canada can directly affect its monetary policy ________, which
then affect its monetary policy ________.
A) goals; targets
B) goals; tools
C) targets; goals
,D) targets; tools - ANSWER-C
The money demand curve has a
A) negative slope because an increase in the interest rate decreases the quantity
of money demanded.
B) positive slope because an increase in the interest rate increases the quantity
of money demanded.
C) negative slope because an increase in the price level decreases the quantity
of money demanded.
D) positive slope because an increase in the price level increases the quantity of
money demanded. - ANSWER-A
Which of the following is not a reason why the Bank of Canada conducts
monetary policy principally through open market operations?
A) Open market operations can be done secretly. B) Open market operations
allow the Bank of Canada to control their volume. C) Open market operations
can be large or small. D) Open market operations can be implemented quickly. -
ANSWER-A
If a bank receives a $1 million discount loan from the Bank of Canada, then the
bank's reserves will
A) not change.
B) increase by $1 million.
C) increase by less than $1 million.
D) increase by more than $1 million. - ANSWER-B
The goal of the Bank of Canada's monetary policy is
A) to keep the unemployment rate below 8 percent.
B) to keep the inflation rate between 1 and 3 percent.
C) to keep mortgage rates below 10 percent.
,D) to keep the money supply growing at a rate of 2 percent per year. -
ANSWER-B
Securitization refers to
A) the process of buying insurance.
B) the purchase of improved electronic and internet security for commercial
banks.
C) the process of transforming loans into assets that can be bought or sold in a
financial market..
D) the process undertaken by banks of transforming loans into debts. -
ANSWER-C
How are firms in the shadow banking industry different from traditional banks?
A) Traditional banks face more regulation.
B) Traditional banks are entirely legal, while the shadow banks exist in a legal
grey area.
C) Traditional banks fund most of their lending from the wholesale market
while shadow banks fund lending by taking deposits.
D) Shadow banks offer lower returns to investor than traditional banks in good
economic times. - ANSWER-A
Assume an asset costs $100. The asset will return $5. If you purchased the asset
entirely with your own money the rate of return would be ________. If you
purchased the asset $10 of your own money and $90 of borrowed money the
rate of return would be ________.
A) 5%; 50%
B) 50%; 5%
C) 5%; 5%
D) 5.5%; 5% - ANSWER-A
, Assume an asset costs $100. The asset ends up losing $2. If you purchased the
asset entirely with your own money the rate of return would b e________. If
you purchased the asset with $10 of your own money and $90 of borrowed
money, the rate or return would be ________.
A) -2%; -20%
B) -20%; -2%
C) -2%; -2.22%
D) 2%; 20% - ANSWER-A
To offset the effect of households and firms deciding to hold less of their money
in checking account deposits and more in currency, the Bank of Canada could
A) decrease its lending to financial institutions.
B) purchase government securities.
C) raise the bank rate.
D) sell government securities - ANSWER-B
To offset the effect of households and firms deciding to hold more of their
money in checking account deposits and less in currency, the Bank of Canada
could
A) raise bank taxes.
B) sell government securities
C) raise government spending.
D) buy government securities. - ANSWER-B
The process of bundling loans together and buying and selling these bundles in
a secondary financial market is called
A) open market operations.
B) securitization.
C) fractional reserve lending.
D) seigniorage. - ANSWER-B
QUESTIONS AND ANSWERS|| GUARANTEED
PASS || ALREADY GRADED A+ || LATEST
VERSION 2025
The goals of monetary policy tend to be interrelated. For example, when the
Bank of Canada pursues the goal of ________, it also can achieve the goal of
________ simultaneously.
A) high employment; economic growth
B) high employment; lowering government spending
C) economic growth; a low current account deficit
D) stability of financial markets; a low current account deficit - ANSWER-A
The Bank of Canada's two main ________ are the money supply and the
interest rate.
A) monetary policy targets
B) policy tools
C) fiscal policy targets
D) fiscal tools - ANSWER-A
The Bank of Canada can directly affect its monetary policy ________, which
then affect its monetary policy ________.
A) goals; targets
B) goals; tools
C) targets; goals
,D) targets; tools - ANSWER-C
The money demand curve has a
A) negative slope because an increase in the interest rate decreases the quantity
of money demanded.
B) positive slope because an increase in the interest rate increases the quantity
of money demanded.
C) negative slope because an increase in the price level decreases the quantity
of money demanded.
D) positive slope because an increase in the price level increases the quantity of
money demanded. - ANSWER-A
Which of the following is not a reason why the Bank of Canada conducts
monetary policy principally through open market operations?
A) Open market operations can be done secretly. B) Open market operations
allow the Bank of Canada to control their volume. C) Open market operations
can be large or small. D) Open market operations can be implemented quickly. -
ANSWER-A
If a bank receives a $1 million discount loan from the Bank of Canada, then the
bank's reserves will
A) not change.
B) increase by $1 million.
C) increase by less than $1 million.
D) increase by more than $1 million. - ANSWER-B
The goal of the Bank of Canada's monetary policy is
A) to keep the unemployment rate below 8 percent.
B) to keep the inflation rate between 1 and 3 percent.
C) to keep mortgage rates below 10 percent.
,D) to keep the money supply growing at a rate of 2 percent per year. -
ANSWER-B
Securitization refers to
A) the process of buying insurance.
B) the purchase of improved electronic and internet security for commercial
banks.
C) the process of transforming loans into assets that can be bought or sold in a
financial market..
D) the process undertaken by banks of transforming loans into debts. -
ANSWER-C
How are firms in the shadow banking industry different from traditional banks?
A) Traditional banks face more regulation.
B) Traditional banks are entirely legal, while the shadow banks exist in a legal
grey area.
C) Traditional banks fund most of their lending from the wholesale market
while shadow banks fund lending by taking deposits.
D) Shadow banks offer lower returns to investor than traditional banks in good
economic times. - ANSWER-A
Assume an asset costs $100. The asset will return $5. If you purchased the asset
entirely with your own money the rate of return would be ________. If you
purchased the asset $10 of your own money and $90 of borrowed money the
rate of return would be ________.
A) 5%; 50%
B) 50%; 5%
C) 5%; 5%
D) 5.5%; 5% - ANSWER-A
, Assume an asset costs $100. The asset ends up losing $2. If you purchased the
asset entirely with your own money the rate of return would b e________. If
you purchased the asset with $10 of your own money and $90 of borrowed
money, the rate or return would be ________.
A) -2%; -20%
B) -20%; -2%
C) -2%; -2.22%
D) 2%; 20% - ANSWER-A
To offset the effect of households and firms deciding to hold less of their money
in checking account deposits and more in currency, the Bank of Canada could
A) decrease its lending to financial institutions.
B) purchase government securities.
C) raise the bank rate.
D) sell government securities - ANSWER-B
To offset the effect of households and firms deciding to hold more of their
money in checking account deposits and less in currency, the Bank of Canada
could
A) raise bank taxes.
B) sell government securities
C) raise government spending.
D) buy government securities. - ANSWER-B
The process of bundling loans together and buying and selling these bundles in
a secondary financial market is called
A) open market operations.
B) securitization.
C) fractional reserve lending.
D) seigniorage. - ANSWER-B
