If the Bank of Canada Chooses to Expand M2 by Exactly

question 37

Multiple Choice

If the Bank of Canada chooses to expand M2 by exactly $1 million,it could do so by

• A)buying $1 million worth of government securities on the open market.
• B)selling $1 million worth of government securities on the open market.
• C)increasing reserves at the commercial banks by $1 million.
• D)decreasing reserves at the commercial banks by $1 million.
• E)None of the above - the Bank of Canada cannot precisely control the money supply.

---

Definitions:

Ambiguous Stimulus

A perceptual object or situation that can be interpreted in more than one way.

Perception

The process by which sensory information is interpreted and organized to make sense of and interact with the environment.

Top-Down Processing

A cognitive process that integrates information based on existing knowledge, expectations, and previous experiences.

Perceptual Imprecision

The variability or lack of accuracy in the way sensory information is interpreted by the brain, often leading to misperceptions or illusions.