Question 6 (1 point) To decrease interest rates, the Bank of Canada should make an open market sale of Treasury bills. Question 6 options: a) True b) False Question 7 (1 point) Saved The overnight rate is the interest rate on _____, and it is influenced by the _____. Question 7 options: a) reserves that banks lend to each other; Governing Council b) loans from the Bank of Canada to banks; prime minister and the federal government c) loans from the Bank of Canada to banks; Governing Council d) reserves that banks lend to each other; prime minister and the federal government Question 8 (1 point) Expansionary monetary policy decreases interest rates and increases aggregate demand. Question 8 options: a) True b) False Question 9 (1 point) In the long run, an increase in the quantity of money: Question 9 options: a) increases real interest rates. b) increases real output. c) has no effect on the economy. d) increases prices but not long-run output. Question 10 (1 point) If the money supply decreases by 5%, in the long run: Question 10 options: a) the price level drops by 5%. b) the unemployment rate rises by 10%. c) interest rates rise by 5%. d) real GDP drops by 5%. Question 11 (1 point) If a government fixes the exchange rate above the market equilibrium rate, there will be a surplus of its currency. Question 11 options: a) True b) False Question 12 (1 point) A hamburger costs $8 in Canada and 960 in Japan. The nominal exchange rate is 110 per dollar. The inflation rates in Canada and Japan are 2% and 4%, respectively. The purchasing power parity is _____ per dollar. Question 12 options: a) 125 b) 112 c) 120 d) 110 Question 13 (1 point) When the dollar value of the Swiss franc was very high following the financial crisis in 2008: Question 13 options: a) Swiss exports were less expensive in Canada. b) Swiss exports were more expensive in Canada. c) the Swiss National Bank sold Swiss francs to increase its value. d) the Swiss National Bank bought francs to decrease its value. Question 14 (1 point) All other things being equal, a depreciation of the domestic currency will cause aggregate demand to increase. Question 14 options: a) False b) True Question 15 (1 point) Assume that the foreign exchange market is trading the domestic currency at a rate (Canadian dollars per unit of the domestic currency) above the rate fixed by the government. To maintain the fixed exchange rate, the government must: Question 15 options: a) lower the domestic interest rate. b) facilitate the domestic purchase of foreign financial assets. c) raise the domestic interest rate. d) decrease foreign exchange reserves. Question 16 (1 point) To encourage an increase in economic growth rates, governments should increase regulation of the economy. Question 16 options: a) True b) False Question 17 (1 point) Diminishing returns to physical capital means that, when the amount of human capital per worker and the state of technology are held fixed, each increase in the amount of physical capital per worker leads to: Question 17 options: a) a constant amount of total output. b) a smaller increase in the marginal product of labour. c) a decrease in the total amount of output. d) negative marginal product.