In Canada, when new demand deposits are created through loans made to Canadians who borrow in order to invest in Canada
a. the Canadian money supply contracts
b. excess reserves in Canadian banks are destroyed
c. the money supply in Canada remains unchanged but the interest rate decreases favoring the Canadian investor
d. the money supply in Canada expands
e. the Canadian legal reserve requirement declines
D
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Which of the following will happen if there is a fall in the supply of credit in an economy without any change in the demand for credit?
A) The real output will fall. B) The labor demand in the economy will increase. C) Its consumption expenditure will increase. D) The real interest rate will fall.
In the long run, the price level adjusts
A) to achieve money market equilibrium. B) so that the inflation rate equals the growth rate of real GDP. C) so that the inflation rate equals zero. D) so that the inflation rate is moderate. E) so that the real interest rate equals the nominal interest rate.
Stock prices can be described as “random walks” if there is no relationship between one day’s prices and the following day’s prices.
Answer the following statement true (T) or false (F)
Which of the following is an outcome of economic variables not moving in sync with inflation?
a. unintended redistributions of purchasing power b. intentional redistributions of purchasing power c. better long-term planning d. decrease in blurred price signals