MidSession02_Answer_Key

MidSession02_Answer_Key - ECONOMICS 104 PRINCIPLES OF...

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Unformatted text preview: ECONOMICS 104 PRINCIPLES OF MACROECONOMICS Section A01 Mid-Session 2 Answer Key 5 November 2010 Instructions: The exam is 50 minutes. There are 40 multiple-choice questions, each worth 1 mark for a total of 40 marks. Use the computer answer sheet provided. You must hand in the examination as well as your computer answer sheet. You are allowed to use a basic, non-programmable calculator. No other electronic devices are permitted. No books or study aids are permitted. Please ensure that all mobile phones are turned off. MAKE SURE YOUR NAME AND STUDENT NUMBER ARE ON YOUR COMPUTER ANSWER SHEET. ECONOMICS 104 PRINCIPLES OF MACROECONOMICS 2 1. The Bank of Canada is responsible for ________ policy and it uses ________ to achieve its objectives. A. fiscal; tax rates B. fiscal; government purchases C. monetary; interest rates D. monetary; the money supply E. structural; the legal system 2. Although the Bank of Canada Act lists several intended objectives of the Bank of Canada, the Bank of Canada's stated sole policy objective since the early 1990s has been A. economic growth. B. exchange rate stability. C. low unemployment. D. low inflation. E. government budget surpluses. 3. Holding all else constant, higher real interest rates promote ________ spending in the economy and result in ________ inflation. A. less; lower B. less; higher C. more; higher D. more; lower E. no change in; lower 4. When the overnight rate exceeds the overnight rate target, settlement balances are in ________ and the Bank of Canada will ________ Government of Canada bonds and ________ them at a predetermined price the next business day. A. deficit; buy; sell B. deficit; sell; buy C. surplus; buy; sell D. surplus; sell; buy E. equilibrium; buy; sell 5. The Bank of Canada implements monetary policy by setting a target for A. potential output. B. the money supply. C. government purchases. D. the exchange rate. E. the overnight interest rate. 6. If inflation does not adjust rapidly, then when the Bank of Canada increases the nominal interest rate, the real interest rate in the short run will A. increase. B. decrease. C. not change. D. equal the nominal interest rate. ECONOMICS 104 PRINCIPLES OF MACROECONOMICS 2 1. The Bank of Canada is responsible for ________ policy and it uses ________ to achieve its objectives. A. fiscal; tax rates B. fiscal; government purchases C. monetary; interest rates D. monetary; the money supply E. structural; the legal system 2. Although the Bank of Canada Act lists several intended objectives of the Bank of Canada, the Bank of Canada's stated sole policy objective since the early 1990s has been A. economic growth. B. exchange rate stability....
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MidSession02_Answer_Key - ECONOMICS 104 PRINCIPLES OF...

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