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Economics > Final > Flashcards

Final Flashcards

1
Q

What is Interest Rates and Monetary Policy

A

Change in money supply by our central bank to remove recessionary and Inflationary gaps

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2
Q

What is Equilibrium in money mkt

A

Intersection of money supply and demand schedule will determine point of equilibrium in money mkt

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3
Q

What are the two types of Demand for money

A

Transactive and Precautionary Demand for money (Dt)
Asset demand for money (Da)

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4
Q

What is the main determinant of Dt

A

Level of Income

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5
Q

Dt is independent of what

A

Rate of interest

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6
Q

Supply of money is determined by what

A

Our central bank independent of the rate of interest

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7
Q

What is Monetary Policy

A

A change in Ms by Bank of Canada to remove recessionary and inflationary gaps

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8
Q

Bank of Canada is what

A

A public institution
Central Bank

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9
Q

What are some functions of Bank of Canada

A

Banker to chartered banks
Each charter bank has a deposit account with BoC and can borrow from BoC
Banker of Federal Gov

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10
Q

What are loans that charter banks take out called

A

Advances and the interest rate they pay is called the bank rate

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11
Q

^ in Ms by Bank of Canada removes what

A

Inflationary and Recessionary gaps

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12
Q

What are some Monetary tools

A

Open MKT operation
Change in overnight loan rate and bank rate
Switching Gov deposits

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13
Q

What happens with a Open MKT Operation

A

Recession: B of C will buy Gov bonds from chartered banks and public
Inflation: B of C will sell Gov bonds to chartered banks and public

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14
Q

What is the overnight loan rate

A

Rate of interest that charter banks charge each other when borrowing

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15
Q

If charter banks are in trouble what can they do?

A

They can borrow money from BoC

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16
Q

Bank rate is how much higher than overnight rate

A

Quarter % higher

17
Q

If there is a Recession what happens to the overnight loan rate

A

Reduces

18
Q

If there is a Inflation what happens to the overnight loan rate

A

Increases

19
Q

What is international trade

A

Export and Import of goods and services and capital across international boundaries

20
Q

What is Terms of trade

A

Rate of which export and imports happen

21
Q

What are the two types of Tariffs

A

Revenue Tariff
Protective Tariff

22
Q

What is a Tariff

A

Taxes that are imposed on products that are not produced domestically

23
Q

What is VER

A

Voluntary
Export
Restriction
Restricting exhibit in order to avoid heavy tax

24
Q

What is Quality Control

A

Country impairs tough regulations on imports to keep prices up

25
Q

If a country holds a tariff on a product from another country what can you expect

A

Retaliation

26
Q

What is the Balance of Payments

A

Record of transactions of the residents of one country and the rest of world

27
Q

If credit > debit then what?

A

Surplus in current account

28
Q

If debit > credit then what?

A

Deficit in current account

29
Q

If credit = debit then what?

A

Balance in current account

30
Q

What are the parts of Current account

A

X and M of Goods
X and M of Services
Net Investments Income
Net Transfers

31
Q

What is short term capital

A

Motive for short term capital movement is the (r) differential between countries

32
Q

What is long term capital

A

Claims with maturity of more than ! year as well as buying and selling shares

33
Q

What is Special Drawing Right

A

Central bank of each country has to aid any deficit

34
Q

What does Special Drawing Right have with each central bank that has a International Monetary Fund

A

Line of Credit

Economics (6 decks)

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