To Increase Aggregate Demand, the Bank of Canada

question 12

Multiple Choice

To increase aggregate demand, the Bank of Canada

• A) sells bonds, decreasing chartered bank reserves, decreasing lending, and lowering the overnight rate.
• B) sells bonds, decreasing chartered bank reserves, decreasing lending, and raising the overnight rate.
• C) sells bonds, decreasing chartered bank reserves, increasing lending, and raising the overnight rate.
• D) buys bonds, increasing chartered bank reserves, increasing lending, and lowering the overnight rate.
• E) buys bonds, increasing chartered bank reserves, increasing lending, and raising the overnight rate.

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Definitions:

Cost-plus Pricing

A pricing strategy where a fixed percentage or a fixed amount is added to the cost price to determine the selling price.

Return on Investment

A measure used to evaluate the efficiency or profitability of an investment, calculated as the net profit divided by the cost of investment.

Markup

The amount added to the cost of a product to cover expenses and generate profit, often expressed as a percentage of the cost.

Absorption Costing

An approach in accounting that involves adding all production-related costs, whether stable or variable, into the product’s final price.