To Remove an Inflationary Gap,the Bank of Canada Would Probably

question 43

Multiple Choice

To remove an inflationary gap,the Bank of Canada would probably seek to

• A)increase its target for the money supply.
• B)decrease its target for the overnight interest rate.
• C)increase its target for the overnight interest rate.
• D)decrease the bank rate.
• E)buy government securities through open-market operations.

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Definitions:

Total Dollar Return

The total gain or loss on an investment over a specific period, combining both capital gains and any dividends or interest received.

Dividends

Payments made by a corporation to its shareholders, usually derived from the company's profits.

SML

Stands for the Security Market Line, which represents the expected return of a market portfolio as a function of systematic, or market, risk.

Risk-Free Rate

The theoretical rate of return of an investment with no risk of financial loss.