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15 Cards in this Set
- Front
- Back
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What are the 5 functions of the bank of Canada(hint: think of the functions of bank of canada)
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1. bank to other banks
2. regulates supply of money(most important) 3. acts as a fiscal agent 4. supervises chartered banks 5. issuing currency |
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True or false: Bank of Canada is independant of the government
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True
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Which of the following fit under liabilities?
a)government deposits b)notes in circulations c)securities d)advances e)a and b f)c and d |
e)
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a)what are transactions demand for money?
b)asset demand for money? |
a) money held for use in medium of exchange (varies directly with nominal GDP)
b)money held for store as value(inversely related to interest rate) |
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what is the relationship between money supply and equilibrium interest rate?
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inverse
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What are 3 ways the chartered bank reserves can be influenced?
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1) open market transactions
2) government deposit switching 3) bank rate |
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What is the relationship between bond prices and interest rates?
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inverse
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when banks buy securities from chartered banks, what happens to the reserves of chartered banks?
b)from the public? |
the actual and excess reserves increase
b)increase actual reserves and demand deposits |
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which method increases the backing of money when talking about government deposit switching?
a)switching deposits from bank to chartered b)from chartered to bank c)from chartered to public d)from public to bank |
a) this increase deposits and reserves and thus increase money supply
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What is expansionary monetary policy?
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increase the money supply by decreasing the interest rate and expanding real GDP
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what happens to the reserves, interest rate, overnight rate and money supply when restrictive policy is used?
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decrease reserves, increase interest rate, increase overnight rate, decrease money supply
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what is Taylor's rule?
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the rule states how much the bank should change the interest rate in response to differences in real GDP to potential GDP
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what the advantages of monetary policy over fiscal policy?
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speed and more flexible, and lastly, but not least importantly, do not assume because i state this last that is not important, free from political pressure, the most important advantage.
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What lag is avoided by monetary policy?
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administrative
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what is a difference between expansionary fiscal and expansionary monetary when discussing net exports?
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fiscal will increase the interest rate while monetary will decrease the interest rate.
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