Chapter 16 - Questions.docx - 1 If government deposits at...

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1. If government deposits at the Bank of Canada are predicted to increase, what open market operations could be undertaken to neutralize the eff ect on settlement balances? 3. If the government has just paid for major computer upgrades and as a result its deposits with the Bank of Canada fall, what open market operations could be undertaken? 5. Most open market operations are currently repurchase agreements. What does this tell us about the likely volume of open market operations relative to dynamic open market operations? 7. If the Bank of Canada did not administer the operating band, what do you predict would happen to the money supply if the bank rate were several percentage points below the overnight rate? 9. “Last-resort lending is no longer needed because the presence of the CDIC eliminates the possibility of bank panics.” Is this statement true, false, or uncertain? 11. You often read in the newspaper that the Bank of Canada has just lowered the target overnight rate. Does

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