Consider the Implementation of Monetary Policy

question 68

Multiple Choice

Consider the implementation of monetary policy.One difficulty in attempting to stabilize the economy by controlling the money supply is that

• A)firms may be sensitive to changes in the rate of interest.
• B)the Bank of Canada can print more money.
• C)the commercial banks may choose not to hold excess reserves.
• D)the money demand function may be unstable.
• E)the Canadian government requires long-term loans.

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Definitions:

Criminal Charges

Legal allegations made by the government claiming an individual or entity has committed a crime.

Elasticity of Demand

A quantification of how price changes influence the amount of a good that is demanded.

Marginal Cost

The supplementary cost involved in creating one more unit of a product or service.

Monopoly

A monopoly is a market structure characterized by a single seller controlling a large portion of the market, lacking significant competition, and often able to influence prices.