CSC TEST 2

The opposite of inflation is…

• stagnation
• deflation
• hyperinflation
• recession

A popular definition of a recession is at least…

• one quarter of negative economic growth
• three consecutive quarters of positive economic growth
• two consecutive quarters of stagnant economic growth
• two consecutive quarters of negative economic growth

How is the Bank Rate determined?

• Upper limit of the operating band for overnight financing by the Bank of Canada.

• The Bank Rate is fixed and does not change over time.
• The Bank Rate is set by commercial banks based on competition.
• The Bank Rate is determined by the stock market performance.

Overnight money is currently trading below the target of the operating band and the Bank of Canada implements an overnight reverse repo to offset the impact this may have on the economy. Why would the Bank of Canada implement this strategy?

• To lower the long-term interest rates in the economy.
• Belief that money supply is growing too slowly.

• Belief that inflationary pressures could rise.

• To increase the money supply and encourage inflation.

Which is a lagging indicator in the economy?

• Inflation rate
• Unemployment rate
• Gross Domestic Product (GDP)
• Stock market performance

Which is not a leading indicator in the economy?

• Gross Domestic Product (GDP)
• Stock market performance
• Consumer confidence index
• Unemployment rate

Which of the following statements is incorrect regarding the determinants of exchange rates?

• Exchange rates are determined by market speculation.
• Exchange rates are influenced only by trade balances.
• Exchange rates are fixed and do not fluctuate.
• Exchange rates are solely determined by government intervention.

Describe the Trough phase of the business/economic cycle

• falling interest rates, inflation falls, stock prices rally

• Business failures outnumber start-ups, stock market prices fall, economic activities decline

• The Trough phase is the lowest point in the business cycle, marked by declining economic activity, high unemployment, and low consumer confidence.
• The Trough phase occurs when consumer confidence is at its highest point.

Coincident indicators include all of the following except:

• personal income

• GDP

• RETAIL SALES

• money supply

Working population includes everyone except:

• unable to work

• not working by choice

• seasonal foreign workers

• the labourforce