Question 1
The Monetary Transmission Mechanism is used for the implementation of monetary policy by the Bank of Canada. Explain how it operates using the three stages to
run the system. Hint see chapter 27 (Money, Interest rate, Economic Activity—pages 680 to 686).
Question Two
There are two alternative approaches for starting the implementation of monetary policy by the Bank of Canada using the Monetary Transmission Mechanism.
Explain each approach separately (how to they start the process). Which approach does the Bank of Canada use? (chapter 28 Money, Banking and Monetary Policy).
Question Three
Explain expansionary and contractionary monetary policies used by the Bank of Canada . What are their main objectives and how are they implemented?