If the Bank of Canada Is Concerned with Inflation It

question 44

Multiple Choice

If the Bank of Canada is concerned with inflation it will _______ the overnight loans rate to _______.

• A)raise; increase aggregate demand
• B)raise; increase potential GDP
• C)lower; increase aggregate demand
• D)raise; decrease aggregate demand
• E)lower; decrease aggregate demand

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Definitions:

Marketable Securities

Financial instruments that can be easily converted into cash because they have high liquidity and short maturities.

Financial Leverage

Employing the use of debt to boost the prospective profits of an investment, which in turn escalates the risk of experiencing a loss.

Debt-To-Equity Ratio

The ratio portraying the financial interplay between shareholder equity and debt in the capital structure for assets.

Net New Bonds

The total value of newly issued bonds minus the bonds that have matured or been bought back by the issuer within a specific period.