Economics Quiz: Currency and Bitcoin

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?

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

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

A current account surplus and a capital account deficit. Signup and view all the answers

Which statement is true regarding federal government revenues in Canada?

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

What role does the Bank President of Canada play?

Managing the monetary policy of Canada. Signup and view all the answers

Which of the following is NOT true about fiscal policy?

It directly controls interest rates in the economy. Signup and view all the answers

Which statement about Bitcoin in Canada is accurate?

Bitcoin is not legal tender in Canada. Signup and view all the answers

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

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

Which statement about Canada's currency is incorrect?

Canada's currency is backed by silver. Signup and view all the answers

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

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

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

The overnight loans rate is lower than the bank rate. Signup and view all the answers

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

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

What comprises the Bank of Canada's operating band?

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

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

Demand for money decreases. 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.