Questions and Answers
Which statement accurately describes the role of the Bank of Canada?
What is a benefit of having a clear inflation-control target?
In the context of monetary policy, what does 'market cycle moderation' refer to?
Which expenditure is categorized as autonomous expenditure?
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If Canadian firms increase exports to Germany, what is the expected impact on the current account?
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Which statement is true regarding federal government revenues in Canada?
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What role does the Bank President of Canada play?
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Which of the following is NOT true about fiscal policy?
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Which statement about Bitcoin in Canada is accurate?
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Which statement regarding the M1 and M2 monetary aggregates is true?
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Which statement about Canada's currency is incorrect?
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Which of the following statements is true regarding the demand for money?
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What is true about the overnight loans rate in relation to the bank rate?
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Which of the following statements regarding the Bank of Canada is correct?
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What comprises the Bank of Canada's operating band?
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What happens when there is a decrease in real GDP concerning money demand?
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Study Notes
Bitcoin and Currency
- Bitcoin is not considered legal tender in Canada; it operates as a digital asset.
- Canada's currency is a fiat currency system, meaning it is not backed by gold or any physical commodity.
Demand for Money
- Interest rates and financial innovation influence the quantity of money people plan to hold.
- The adoption of credit and debit cards reduces the demand for physical cash.
Bank of Canada Operations
- The overnight loans rate is lower than the bank rate, which influences short-term interest rates.
- The Bank of Canada does not lend money directly to the general public but operates through financial institutions.
Monetary Policy
- Successful inflation-control targets help the financial market understand monetary policy, aiding savers and investors.
- The Bank of Canada's goal is to maintain a 2% inflation rate within a 1% to 3% range through monetary policy, not fiscal policy.
Aggregate Expenditure Model
- Autonomous expenditure is defined as expenditure that is independent of income and real GDP.
- Induced expenditure refers to expenditures that change as income and real GDP fluctuate.
Current and Capital Accounts
- An increase in Canadian exports to Germany results in a surplus in the current account and a deficit in the capital account, as foreign entities borrow to fund imports.
Federal Budget and Revenue
- The Canadian federal budget is presented to Parliament by the Prime Minister.
- Corporate income taxes are the largest source of revenue for the Canadian federal government.
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Description
Test your knowledge on the concepts of currency, Bitcoin, and economic definitions in Canada. This quiz evaluates your understanding of legal tender and the characteristics of modern currency systems.