Macro_Ch9

Question 1

What is the effect of expansionary monetary policy?

Accepted Answer

The money supply increases and interest rates fall

Question 2

An increase in money supply, according to Keynes, will cause investment and R.GDP to increase

Accepted Answer

True

Question 3

When does the demand for money curve shift to the left?

Accepted Answer

If the price level decreases

Question 4

What is the name of the interest rate that the Bank of Canada charges to the commercial banks

Accepted Answer

The bank rate

Question 5

Contractionary monetary policy will result in a rightward shift in the AD curve

Accepted Answer

False

Question 6

What does the Keynesian transmission process involve?

Accepted Answer

money supply, the interest rate, I, and GDP

Question 7

The asset demand for money is closely related to which function of money?

Accepted Answer

store of wealth

Question 8

The transaction demand for money is determined by how much money people need

Accepted Answer

False

Question 9

An interest rate above equilibrium will lead to a surplus of money

Accepted Answer

True

Question 10

Which of the following would be appropriate in an economy experiencing an inflationary gap?

Accepted Answer

A tighter monetary policy that decreased money supply

Questions 10