Economics Quiz: Currency and Bitcoin
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Questions and Answers

Which statement accurately describes the role of the Bank of Canada?

  • The Bank of Canada lends money directly to the public.
  • The Bank of Canada primarily operates through financial institutions. (correct)
  • The top person at the Bank of Canada is known as the Central Banker.
  • The Bank of Canada is responsible for setting corporate income tax rates.

    • What is a benefit of having a clear inflation-control target?

  • It guarantees that there will be no inflation.
  • It ensures that the economy will always grow at a steady rate.
  • It gives complete control to the Prime Minister over monetary policy.
  • It allows traders to make fewer mistakes regarding future monetary policy. (correct)

    • In the context of monetary policy, what does 'market cycle moderation' refer to?

  • A method to keep the capital account balanced.
  • Influencing public spending through federal budgets.
  • Changing tax rates to influence the economy.
  • Adjusting the quantity of money and interest rates to manage inflation. (correct)

    • Which expenditure is categorized as autonomous expenditure?

    <p>Expenditure that remains unchanged regardless of income or GDP.</p> Signup and view all the answers

    If Canadian firms increase exports to Germany, what is the expected impact on the current account?

    <p>A current account surplus and a capital account deficit.</p> Signup and view all the answers

    Which statement is true regarding federal government revenues in Canada?

    <p>The primary source of revenue is personal income tax.</p> Signup and view all the answers

    What role does the Bank President of Canada play?

    <p>Managing the monetary policy of Canada.</p> Signup and view all the answers

    Which of the following is NOT true about fiscal policy?

    <p>It directly controls interest rates in the economy.</p> Signup and view all the answers

    Which statement about Bitcoin in Canada is accurate?

    <p>Bitcoin is not legal tender in Canada.</p> Signup and view all the answers

    Which statement regarding the M1 and M2 monetary aggregates is true?

    <p>Most of the deposits in M1 and M2 are deposits of chartered banks.</p> Signup and view all the answers

    Which statement about Canada's currency is incorrect?

    <p>Canada's currency is backed by silver.</p> Signup and view all the answers

    Which of the following statements is true regarding the demand for money?

    <p>Adoption of credit and debit cards decreases the demand for money.</p> Signup and view all the answers

    What is true about the overnight loans rate in relation to the bank rate?

    <p>The overnight loans rate is lower than the bank rate.</p> Signup and view all the answers

    Which of the following statements regarding the Bank of Canada is correct?

    <p>The Bank of Canada does not lend money to individuals or businesses.</p> Signup and view all the answers

    What comprises the Bank of Canada's operating band?

    <p>The operating band includes the prime rate, overnight rate, and settlement balances rate.</p> Signup and view all the answers

    What happens when there is a decrease in real GDP concerning money demand?

    <p>Demand for money decreases.</p> Signup and view all the answers

    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.

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