--%>
Assignment Help - homework help

Modify-open market operations-switching government deposits

Assume that you are the governor of the Bank of Canada. The economy is experiencing sharp and prolonged inflationary trend.  What modify in (a) open market operations, and (b) switching government deposits would you assume? Describe in each of the case how the change you advocate would influence chartered bank cash reserves and affect the money supply.

E

Expert

Verified

To decrease inflation, the Bank of Canada would increase interest rates.  It would be accomplished typically through open-market operations (selling bonds), however could also be obtained by switching government deposits from the chartered banks to the Bank of Canada. In both of the cases it would decrease chartered bank cash reserves.

The restrictive monetary policy would decrease the lending ability of the banking system, enhance the real interest rate, decrease investment spending, decrease aggregate demand, and decrease inflation.

 

   Related Questions in Finance Basics

  • Q : Explain computing of payback period How

    How do we compute the payback period for proposed capital budgeting project? What are the basic criticisms of the payback method? We compute the payback period for proposed project through adding a project's positive cash flows, one period at t

    		•
  • Q : What is Appropriation Schedule

    Appropriation Schedule: The detail of an appropriation (example, in the Budget Act), exhibiting the distribution of the appropriation to each of the class, programs, or projects thereof.

    		•
  • Q : Describe the fact of common

    Normal 0 false false

  • Q : Define Executive Branch Executive

    Executive Branch: One of the three branches of state government, accountable for administering and implementing the state's laws and programs. The Governor's Office and those individuals, departments, and offices reporting to it (that

    		•
  • Q : Multiplier effect Normal 0 false false

    Normal 0 false false

    		•
  • Q : Short run and long run influence Normal

    Normal 0 false false

  • Q : Frequency Distribution What is

    What is Frequency Distribution? Compare Categorical Frequency Distribution, Ungrouped Frequency Distribution, Grouped Frequency Distribution?

    		•
  • Q : Why do focusing on cash flows rather

    Why do we focus on cash flows rather than profits while evaluating proposed capital budgeting projects? We targeted on cash flows instead of profits while evaluating proposed capital budgeting projects since it is cash flow that changes the valu

    		•
  • Q : Assignments i want to write final state

    i want to write final state report. My state is Texas. You can use the resources that i attached, also you can use another resources to cover the outlines.

    		•
  • Q : Contrast prescribed benefit and

    Compare and contrast a prescribed benefit and contribution pension plan.In a prescribed benefit plan, retirement benefits are determined by a formula that typically considers the worker's age, salary, and years of service.  The employee and

    		•