the economics of money, banking, and financial markets

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4. 
   

   The natural rate of output is also known as ____.
   A) potential output
   B) NAIRU
   C) structural output
   D) GDP
   Answer: A
   Diff: 1 Type: MC Page Ref: 441
   Skill: Recall
   Objective List: 16.1 Summarize the Bank of Canada's balance sheet and the monetary base

   
   


5. 
   

   Interest rate stability is desirable because ____.
   A) fluctuations in interest rates create uncertainty
   B) it leads to financial market stability
   C) stability in the foreign exchange markets
   D) all of the above
   Answer: D
   Diff: 1 Type: MC Page Ref: 441
   Skill: Recall
   Objective List: 18.1 Assess the different types of monetary policy strategy

   
   


6. 
   

   Increases in interest rates ____.
   A) cause large capital losses
   B) could lead to bank failures
   C) affect consumers' willingness to buy houses
   D) all of the above
   Answer: D
   Diff: 1 Type: MC Page Ref: 441
   Skill: Recall
   Objective List: 18.1 Assess the different types of monetary policy strategy