If the Bank of Canada Increases the Monetary Base by $5

question 36

Multiple Choice

If the Bank of Canada increases the monetary base by $5 million and the money multiplier is 5,M1 will

• A)rise by $25 million.
• B)fall by $25 million.
• C)rise by $1 million.
• D)fall by $1 million.

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Definitions:

Particular Good

A specific item or product that satisfies consumers' needs or wants, distinguishable from general categories or types of goods.

Market Price

The current price at which an asset or service can be bought or sold in a market.

Production Possibilities Curve

A graphical representation that shows the maximum number of goods or services that can be produced using limited resources efficiently.

Technology Fixed

A scenario in economic models where the level of technology is assumed to remain constant, ignoring any potential technological advancements or changes.