Assignment_2_2450_10

Assignment_2_2450_10 - York University Department of...

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York University Department of Economics Faculty of Arts and Professional Studies AP / ECON 2450 M Fall 2010 I NTERMEDIATE M ACROECONOMIC T HEORY II PROFESSOR TASSO ADAMOPOULOS ASSIGNMENT 2 Section I: Multiple Choice Questions (Total Marks 48) 1. A government that finances its spending by printing money A) is actually financing its spending by borrowing from the public. B) is actually financing its spending by borrowing from other branches of government. C) is actually financing its spending by levying a tax on holdings of cash. D) is actually financing its spending by borrowing from people in other countries. 2. All of the following are assets that appear on the balance sheet of the Bank of Canada except A) bonds. B) foreign exchange reserves. C) currency held by households. D) loans to chartered banks. 3. An open market operation where the Bank of Canada buys for $1 million of bonds from the chartered banks will A) Increase the money supply by $1 million. B) Increase the money supply by less than $1 million. C) Increase the money supply by more than $1 million. D) Will not affect the money supply but will increase high-powered money by $1 million. 4. Which of the following is the equation for the money supply? A) CU + RE B) CU + D C) (c + r D ) x D. D) All of the above
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5. Under the sticky price model, an increase in the money supply will A) shift the money demand curve to the left, resulting in a decrease in the short-term nominal interest rate. B) shift the money supply curve to the right, resulting in a decrease in the short-term nominal interest rate. C) shift the money supply curve to the left, resulting in an increase in the short-term nominal interest rate. D) shift the money demand curve to the right, resulting in an increase in the
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This note was uploaded on 09/01/2011 for the course ECON 2450 taught by Professor Tasso during the Winter '09 term at York University.

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Assignment_2_2450_10 - York University Department of...

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