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The Central Bank of Canada which is Bank of Canada generally adopts two type of monetary policy for fighting different type of situations in the country
If there is is inflationary gap in the economy then it adopts for contractionary monetary policy in which the goal is to reduce the money supply in the economy by increasing the interest rate
This will cause the fall in the investment spending, consumption
Due to this policy the currency of the Canadian dollar will appreciate and when there is appreciation of Canadian dollar then there will be more export and less import or we can say that net export is positive
High interest rate on bond will be there also
So the correct answer here are options a c and d
If the Bank of Canada conducts contractionary monetary policy, which of the following can we expect...
f contractionary monetary policy is used, then which of the following would be most likely to enhance the effect of the contractionary policy on aggregate demand? Interest rates would increase, leading to an exchange rate appreciation and a fall in net exports. Interest rates would decrease, leading to an exchange rate appreciation and a fall in net exports. Interest rates would decrease, leading to an exchange rate depreciation and a rise in net exports. Interest rates would increase, leading to...
Which of the following describes what the Reserve Bank of Australia would do to pursue an contractionary monetary policy? Use open market operations to buy bonds and securities. Use open market operations to sell bonds and securities Use open market operations to increase the overnight cash rate. Increase interest rates on mortgages and corporate loans. The Reserve Bank of Australia manages the supply of cash on a daily basis to ensure that every bank has sufficient cash to meet the...
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Suppose the Bank of Canada implements monetary policy which results in an immediate increase in aggregate demand of $12 Billion. If the spending multipler is 1.5 what would be the ultimate effect of this monetary policy on total economic output? a) it would rise by $1.5 billion b) it would fall by $12 billion c) it would rise by $18 billion d) no change e)it would fall by $18 billion
Explain the linkages in causal chain when the central bank conducts a contractionary monetary policy. what will be the ultimate effect on GDP?
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Describe the effects of contractionary monetary policy by the domestic central bank on output, the real interest rate, and net exports in both the domestic and foreign country, using a Keynesian model in the short run. What happens in the long run? (Word Limit: 100 words)
c) 3 marks The Bank of Canada currently has a monetary policy target of 2% inflation. Suppose that the Federal Reserve in the US holds inflation at 3% for a sustained period of time. Would the Canadian dollar appreciate or depreciate against the US dollar over time? What would be the effect on the real exchange rate? d) 3 marks Consider a small open economy in equilibrium. What would be the effects of a protectionist trade policy in the short...
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...
Beginning from a position of long-run equilibrium, an expansionary monetary policy by the Bank of Canada causes A) an increase in the level of potential output B) a fall in the general price level C) an increase in most market interest rates D) aggregate demand for goods and services to exceed potential output E) aggregate demand for goods and services to fall short of potential output