Question : 51) To remove a recessionary gap, the Bank of Canada : 1384470

51) To remove a recessionary gap, the Bank of Canada would probably seek to

A) increase its target for the overnight interest rate.

B) increase the bank rate.

C) decrease its target for the overnight interest rate.

D) sell government securities through open-market operations.

E) decrease its target for the money supply.

52) If there were a large and persistent recessionary gap, an appropriate monetary policy could include

A) increasing the bank rate.

B) increasing the overnight lending rate.

C) decreasing reserves available to the commercial banks.

D) the Bank of Canada reducing its target for the overnight interest rate.

E) the Bank of Canada selling government securities to the public.

53) Changes in monetary aggregates such as M2 and M2+ can be a poor guide to the stance of monetary policy if

A) commercial bank reserves are rising.

B) interest rates are changing rapidly.

C) interest rates are constant.

D) money demand is changing in unpredictable ways.

E) money demand is constant.

54) If desired investment spending is relatively sensitive to changes in interest rates, then monetary policy could be very useful because it would

A) be very effective in reducing expenditure during inflationary periods and very effective in expanding expenditure during recessionary periods.

B) be very effective in reducing expenditure during inflationary periods and ineffective in expanding expenditure during recessionary periods.

C) be very ineffective in reducing expenditure during inflationary periods and very effective in expanding expenditure during recessionary periods.

D) be very ineffective in reducing expenditure during inflationary periods and very ineffective in expanding expenditure during recessionary periods.

E) be somewhat effective in reducing expenditure during inflationary periods and very ineffective in expanding expenditure during recessionary periods.

55) If we observe that the bank rate has increased, we can conclude that the

A) Bank of Canada has implemented an expansionary monetary policy.

B) Bank of Canada has implemented a contractionary monetary policy.

C) Bank of Canada has abandoned its inflation target.

D) Government of Canada has reduced the money supply.

E) Bank of Canada has adjusted the rate it pays on Treasury bills.

56) If we observe that the bank rate has fallen, we can conclude that the

A) Bank of Canada has implemented a contractionary monetary policy.

B) Bank of Canada has abandoned its inflation target.

C) Government of Canada has reduced the money supply.

D) Bank of Canada has implemented an expansionary monetary policy.

E) Bank of Canada has adjusted the rate it pays on Treasury bills.

57) If we observe a small increase in the actual overnight interest rate over a several-day period, we can definitely conclude that the

A) Bank of Canada has implemented an expansionary monetary policy.

B) Bank of Canada has implemented a contractionary monetary policy.

C) Bank of Canada has abandoned its inflation target.

D) Government of Canada has reduced the money supply.

E) It is not possible to conclude any of the above.

58) If we observe a small decrease in the actual overnight interest rate over a several-day period, we can definitely conclude that the

A) Bank of Canada has implemented an expansionary monetary policy.

B) Bank of Canada has implemented a contractionary monetary policy.

C) Bank of Canada has abandoned its inflation target.

D) Government of Canada has reduced the money supply.

E) It is not possible to conclude any of the above.

59) If we observe that the actual rate of CPI inflation has fallen, we can certainly conclude that the

A) Bank of Canada has implemented an expansionary monetary policy.

B) Bank of Canada has implemented a contractionary monetary policy.

C) Bank of Canada has abandoned its inflation target.

D) Government of Canada has reduced the money supply.

E) It is not possible to conclude any of the above.

60) If we observe that the actual rate of CPI inflation has increased, we can certainly conclude that the

A) Bank of Canada has implemented an expansionary monetary policy.

B) Bank of Canada has implemented a contractionary monetary policy.

C) Bank of Canada has abandoned its inflation target.

D) Government of Canada has reduced the money supply.

E) It is not possible to conclude any of the above.