From an Initial Long-Run Macroeconomic Equilibrium, If the Bank of Canada

question 88

Multiple Choice

From an initial long-run macroeconomic equilibrium, if the Bank of Canada anticipated that next year aggregate demand would grow significantly slower than long-run aggregate supply, then the Bank of Canada would most likely

• A)increase its target for the overnight rate.
• B)extend fewer loans to commercial banks.
• C)purchase government securities.
• D)sell government securities.
• E)tighten mortgage lending rules to prevent a banking crisis.

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Definitions:

Net Income

The profit a company reports after all operational expenses and tax obligations are subtracted from its revenue.

Cash Flow

The total interchange of cash and assets comparable to cash, circulating in and out of a commercial venture.

Creditors

Individuals or institutions that lend money or extend credit to others, expecting repayment.

Long-Term Debt

Borrowings and financial obligations lasting more than one year, used to finance a company’s operations or other long-term investments.