Suppose the Actual Overnight Interest Rate Is 3

question 7

Multiple Choice

Suppose the actual overnight interest rate is 3.5%.If the Bank of Canada raises its target for the overnight interest rate to 4%,and longer-term interest rates in the market rise as a result,

• A)the demand for loans from commercial banks falls,the commercial banks sell government securities to the Bank of Canada,and the money supply falls.
• B)the demand for loans from commercial banks rises,the commercial banks buy government securities from the Bank of Canada,and the money supply falls.
• C)the demand for loans from commercial banks rises,the commercial banks sell government securities to the Bank of Canada,and the money supply rises.
• D)the demand for loans from commercial banks falls,the commercial banks buy government securities from the Bank of Canada,and the money supply falls.
• E)the demand for loans from commercial banks rises the commercial banks buy government securities from the Bank of Canada,and the money supply rises.

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Definitions:

Direct Materials

Materials that can be directly attributed to the production of specific goods or services and are an essential component of finished products.

Fixed Overhead

Indirect costs of production that remain relatively constant regardless of the level of output, such as rent, salaries, and insurance.

Variable Overhead

Costs that fluctuate with the level of production output, such as utilities or raw materials.

Direct Labor

The wages paid to employees who are directly involved in producing goods or providing services.