i the decline in both the number of payroll jobs and hours w

i. the decline in both the number of payroll jobs and hours worked surprised many analysts, who said the report put new pressure on the Bank of Canada to…….

a. lower interest rates.

b. increase interest rates.

c. decreases the money supply.

d. keeps money growth constant.

ii. suppose real growth is 2%, the real interest rate is 3%, the money multiplier is 5, seignior age is $4b, and the money supply is $200b. the nominal interest rate is:

a. 8%

b. 9%

c. 10%

d. 11%

iii. the price control program, which was adopted in the second half of 1971, partly suspended the market system, producing distortion and shortages while suppressing inflation instead of resolving it.

The inflation was suppressed rather than resolved because:

a.The permitted price increases were not set low enough.

b.The money supply growth rate was not lowered enough.

c.The penalties for violation of the controls were too light.

d.The market system was partly instead of fully suspended.

Solution

i. The correct answer is A. The central bank should lower interest rates to increase financial activity.

ii. The correct answer is B.

iii. The correct answer is A.