--%>
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 : Describe benefits of collecting early

    Describe benefits of "collecting early" and how do companies effort to do this? Money contains time value. The sooner cash is gathered, the better. Companies employ regional collection centres and lock boxes to facilitate this.

    		•
  • Q : Clarify trade credit is free credit or

    Trade credit is free credit. Do you agree or conflicting with this statement? Clarify. Trade credit is not free. It contains a cost. Who bears that cost based on the terms of the transaction among the grantor and the recipient of the trade c

    		•
  • Q : Debit or credit Hi this is Shailender

    Hi this is Shailender Ojha i want to know when we receive the sales where we put the sales. in debit or credit column . could you please let me know.

    		•
  • Q : Finance Assignment # 4 Can you please

    Can you please Help me with this Assignment the due date is 1/20/14 at 6pm

    		•
  • Q : Explain Object of Expenditure Object of

    Object of Expenditure (Objects): It is a categorization of expenditures based on the kind of goods or services received. For illustration, the budget group of Personal Services comprises the objects of Salaries and Wages and Staff Benefits.

  • Q : Derive the long-run aggregate supply

    Normal 0 false false

  • Q : Define Financial Controls Financial

    Financial Controls: Any measure of how fine a company or department controls its costs, at times stated as how far beneath or over budget it is. Financial controls are a critical portion of any financial system. They make sure that the resources are b

    		•
  • Q : Disadvantages of the Finger print

    Disadvantages of the Finger print technique: Health concerns while touching the sensor which is being touched by many number of individuals. Sometimes due to age and occupation may cause some diff

    		•
  • Q : What is FERA FERA stands for The

    FERA stands for The Federal Emergency Relief Administration. The program was renamed as a direct relief operation in Roosevelt Administration. It was a form of an unemployment insurance.

    		•
  • Q : Advantages and disadvantages of working

    Describe the advantages and disadvantages of the aggressive working capital financing approach? An aggressive working capital financing approach generally results in a lower cost of funds for a firm however a higher level of risk.

    		•