Question :
101) If the Bank of Canada pursues a contractionary monetary : 1384549
101) If the Bank of Canada pursues a contractionary monetary policy, interest rates in Canada will
A) rise, there will be a capital outflow, and the Canadian dollar will depreciate.
B) rise, there will be a capital inflow, and the Canadian dollar will appreciate.
C) fall, there will be a capital inflow, and the Canadian dollar will depreciate.
D) fall, there will be a capital outflow, and the Canadian dollar will appreciate.
E) fall, there will be a loss in official reserves at the Bank of Canada, and the Canadian dollar will depreciate.
102) Under a system of flexible exchange rates, a nation which tightens its monetary policy would be likely to experience
A) a loss in international reserves.
B) a fall in the value of its currency.
C) short-term capital outflows.
D) an appreciation of its currency.
E) a surplus in its current account.
103) An increase in Canadian interest rates (caused by a monetary contraction) should
A) decrease the external value of the Canadian dollar.
B) stimulate Canadian exports.
C) increase the external value of the Canadian dollar.
D) always induce an offsetting action by the Bank of Canada.
E) lead to a surplus in Canada’s current account.
104) Suppose Canada has a flexible exchange rate. If there is a decline in the world price of copper (a major Canadian export), other exporting sectors of the Canadian economy will likely ________ due to the resulting ________ of the Canadian dollar.
A) contract; depreciation
B) contract; appreciation
C) expand; depreciation
D) expand; appreciation
E) expand; the reduced speculative appeal of
105) Suppose Canada has a flexible exchange rate. If there is a rise in the world price of copper (a major Canadian export), other exporting sectors of the Canadian economy will likely ________ due to the resulting ________ of the Canadian dollar.
A) contract; depreciation
B) contract; appreciation
C) expand; depreciation
D) expand; appreciation
E) expand; reduced speculative appeal
106) Suppose two countries, A and B, are trading with each other. Suppose also that the rate of inflation in B is higher than in A. There will be
A) an increase in the demand for Country B’s currency in the foreign-exchange market.
B) an increase in Country B’s exports.
C) a decrease in Country B’s imports.
D) an increase in the supply of Country B’s currency in the foreign-exchange market.
E) no effect on the foreign-exchange market.
107) If the Bank of Canada pursues an expansionary monetary policy,
A) interest rates will rise, there will be a capital outflow, and the Canadian dollar will depreciate.
B) interest rates will rise, there will be a capital inflow, and the Canadian dollar will appreciate.
C) interest rates will fall, there will be a capital inflow, and the Canadian dollar will depreciate.
D) interest rates will fall, there will be a capital outflow, and the Canadian dollar will appreciate.
E) interest rates will fall, there will be a capital outflow, and the Canadian dollar will depreciate.
108) Consider a country that is operating under a system of flexible exchange rates. If the central bank in this country imposes an expansionary monetary policy, it would be likely to experience
1) a depreciation of its currency;
2) short-term capital outflows;
3) an appreciation of its currency.
A) 1 only
B) 2 only
C) 3 only
D) 1 and 2
E) 2 and 3
109) Suppose the Bank of Canada raises its target for the overnight interest rate from 3% to 3.25%, while interest rates in other countries do not change. The result will be
A) an inflow of financial capital, a decrease in demand for Canadian dollars, and a depreciation of the Canadian dollar.
B) an inflow of financial capital, an increase in demand for Canadian dollars, and a depreciation of the Canadian dollar.
C) an inflow of financial capital, an increase in demand for Canadian dollars, and an appreciation of the Canadian dollar.
D) an outflow of financial capital, an increase in demand for Canadian dollars, and an appreciation of the Canadian dollar.
E) an outflow of financial capital, a decrease in demand for Canadian dollars, and a depreciation of the Canadian dollar.
110) Suppose the Bank of Canada raises its target for the overnight interest rate from 3% to 3.25%, while interest rates in other countries do not change. How will this policy action affect Canada’s imports and exports?
A) The Canadian dollar will appreciate and encourage imports into Canada.
B) The Canadian dollar will appreciate and encourage Canada’s exports.
C) The Canadian dollar will depreciate and discourage Canada’s exports.
D) The Canadian dollar will depreciate and encourage imports into Canada.
E) The Canadian dollar will appreciate and discourage imports into Canada.