Question 1

One of the monetary policy goals of the Bank of Canada is price stability.

Accepted Answer

Price stability is one of the primary objectives of the Bank of Canada's monetary policy, along with promoting economic growth and employment. The Bank of Canada monitors and adjusts interest rates to achieve and maintain price stability, which is defined as keeping inflation low, stable, and predictable over the long term.

Question 2

The turmoil in financial markets that began in 2007 led the Bank of Canada to put new emphasis on
A)fighting inflation.
B)increasing employment.
C)increasing economic growth.
D)increasing regulation of commercial banks.
E)increasing financial market stability.

Accepted Answer

The turmoil in financial markets that began in 2007 led the Bank of Canada to put new emphasis on increasing financial market stability. This is evident from several measures taken by the Bank of Canada such as introducing new regulations for commercial banks and implementing unconventional monetary policies to stabilize financial markets.

Question 3

Monetary policy is conducted by the federal Department of Finance.

Accepted Answer

Monetary policy is actually conducted by the central bank of a country, such as the Federal Reserve in the United States. The federal Department of Finance is responsible for fiscal policy, which involves government spending and taxation.

Question 4

The Bank of Canada focuses on which of the following as their main goal of monetary policy?
A)high employment
B)price stability
C)economic growth
D)stability of financial markets
E)balanced budgets

Accepted Answer

The Bank of Canada's main goal of monetary policy is to maintain price stability, which means keeping inflation low and stable. While the Bank of Canada does consider other factors such as employment and economic growth, these are not the primary focus of their monetary policy.

Question 5

What is a symmetric inflation targeting, and what does it mean for the Bank of Canada?

Accepted Answer

The answer of What is a symmetric inflation targeting, and...

Question 6

Monetary policy refers to the actions the Bank of Canada takes to manage
A)the money supply and income tax rates to pursue its economic objectives.
B)the money supply and interest rates to pursue its economic objectives.
C)income tax rates and interest rates to pursue its economic objectives.
D)government spending and income tax rates to pursue its economic objectives.
E)the money supply to meet its budgetary objectives.

Accepted Answer

Monetary policy refers to the actions taken by the central bank to manage the money supply and interest rates to achieve its economic objectives such as stable inflation, low unemployment, and economic growth. The Bank of Canada uses various tools such as open market operations, changes in the overnight lending rate, and reserve requirements to influence the money supply and interest rates in the economy.

Question 7

Monetary policy refers to the actions the
A)Prime Minister and Parliament take to manage the money supply and interest rates to pursue their economic objectives.
B)Bank of Canada takes to manage the money supply and interest rates to pursue its macroeconomic policy objectives.
C)Prime Minister and Parliament take to manage government spending and taxes to pursue their economic objectives.
D)Bank of Canada takes to manage government spending and taxes to pursue its economic objectives.
E)Commercial bank decisions determining when and to whom to make loans.

Accepted Answer

Monetary policy is the process by which the central bank (in this case, the Bank of Canada) adjusts the money supply and interest rates to achieve macroeconomic objectives such as price stability, full employment, and economic growth. The Prime Minister and Parliament are responsible for fiscal policy, which involves managing government spending and taxes to achieve economic objectives. Commercial bank decisions are not considered monetary policy as they are determined by the individual banks themselves.

Question 8

The Bank of Canada does not regulate financial institutions, but it does act as the "lender of last resort" by lending to commercial banks when they are temporarily short of funds.The goal of the Bank of Canada filling this role is to
A)reduce the rate of inflation.
B)stimulate economic growth.
C)reduce unemployment.
D)reassure financial markets and promote financial stability.
E)reduce the current account deficit.

Accepted Answer

The role of the Bank of Canada as the "lender of last resort" is to reassure financial markets and promote financial stability by providing temporary liquidity to commercial banks that may be experiencing short-term funding issues. This helps to prevent systemic risks and maintain confidence in the financial system.

Question 9

Central banks around the world have pursued historically low interest rates in an effort to
A)redistribute wealth from lenders to borrowers.
B)reduce government interest payment on past borrowing thus allowing more to be spent on social programs.
C)provide governments with a justification for running large budget deficits.
D)to encourage consumers to spend more and thus shift aggregate demand to the right.
E)to reduce the incomes of capitalists.

Accepted Answer

The historically low interest rates pursued by central banks are intended to stimulate consumer spending and increase aggregate demand, which would help to boost economic growth. Lower interest rates make it cheaper for consumers to borrow money, which can encourage them to spend more on goods and services. This, in turn, can drive up demand for products, which can help to increase economic output and create jobs.

Question 10

The Bank of Canada system's four monetary policy goals are
A)low government budget deficits, low current account deficits, high employment, and a high foreign exchange value of the dollar.
B)rate of bank failures, high reserve ratios, price stability, and economic growth.
C)price stability, high employment, economic growth, and stability of financial markets and institutions.
D)price stability, low government budget deficits, low current account deficits, and low rate of bank failures.
E)price stability, high levels of retirement savings, economic growth, and financial market stability.

Accepted Answer

The Bank of Canada system's four monetary policy goals are price stability, high employment, economic growth, and stability of financial markets and institutions. These goals aim to promote the long-term economic health of the country by maintaining stable prices, supporting job creation, fostering sustainable economic growth, and ensuring the stability of the financial system. The other choices listed do not align with the Bank of Canada's goals.

Question 11

If the probability of losing your job remains ________, a recession would be a good time to purchase a home because the Bank of Canada usually ________ interest rates during this time.
A)low; lowers
B)low; raises
C)high; lowers
D)high; raises
E)low; does not change

Accepted Answer

If the probability of losing your job remains low, it would be a good time to purchase a home during a recession because the Bank of Canada usually lowers interest rates during this time. This allows for cheaper borrowing, making it easier to afford a mortgage.

Question 12

The main goal of monetary policy for the Bank of Canada recently has been to maintain high employment in labour markets.

Accepted Answer

The main goal of monetary policy for the Bank of Canada, like most central banks, is to maintain price stability (controlling inflation) and to promote economic well-being and sustainable growth, which indirectly supports employment. However, its primary focus is not solely on maintaining high employment in labor markets.

Question 13

Since World War II, the Bank of Canada has not been involved in carrying out monetary policy.

Accepted Answer

Since World War II, the Bank of Canada has been actively involved in carrying out monetary policy, including setting interest rates and managing the money supply.

Question 14

When the Bank of Canada Act was passed in 1934, it was stated that the main responsibility is to conduct monetary policy to
A)prevent bank panics.
B)promote price stability.
C)promote the best interests of economic life of Canada.
D)keep employment high.
E)promote good governance in Canada.

Accepted Answer

The Bank of Canada Act of 1934 stated that the main responsibility of the Bank of Canada is to promote the best interests of the economic life of Canada.

Question 15

Which of the following are goals of monetary policy?
A)maximizing the value of the dollar relative to other currencies, economic growth, and high employment
B)price stability, maximizing the value of the dollar relative to other currencies, and high employment
C)price stability, economic growth, and high employment
D)price stability, economic growth, and maximizing the value of the dollar relative to other currencies
E)price stability, high employment, economic growth, and encourage financial literacy

Accepted Answer

The primary goals of monetary policy are price stability, economic growth, and high employment. These objectives aim to maintain a stable economic environment. Maximizing the value of the dollar relative to other currencies is more related to exchange rate policy, and encouraging financial literacy, while beneficial, is not a direct goal of monetary policy.

Question 16

The Bank of Canada seeks to promote stability of financial markets because
A)they want to lift the self-esteem of workers.
B)it was a principle mandated in the Royal Commission of 1933, which directly led to the founding of the Bank of Canada.
C)resources are lost when there is not efficient matching of savers and borrowers.
D)unstable markets result in increased efficiency.
E)stable financial markets are key to growing concentrations of wealth.

Accepted Answer

Efficient matching of savers and borrowers is crucial for optimal resource allocation, and instability can lead to resource wastage.

Question 17

Why would businesses watch the bank of Canada for signs of changing interest rates?
A)Changes in the Bank of Canada's key policy rate determine the cost of the labour.
B)Many consumers borrow heavily to finance durable products, sales of these goods are likely to rise when the Bank of Canada lowers the interest rate.
C)Changes in Bank of Canada policy determine the federal income tax rate.
D)Changes in the Bank of Canada's key policy rate are good indicators of federal government spending decisions.
E)Many consumers base their expectations of future income on the Bank of Canada's policy announcements.

Accepted Answer

Businesses would watch the Bank of Canada for signs of changing interest rates because many consumers borrow heavily to finance durable products, and sales of these goods are likely to rise when the Bank of Canada lowers the interest rate. Lower interest rates can prompt consumers to borrow more, thus increasing demand for goods and services.

Question 18

Inflation rates during the years 1979-1981 were the highest Canada has ever experienced post-1950.

Accepted Answer

The inflation rates during the years 1979-1981 were indeed the highest Canada has ever experienced post-1950, with peak annual inflation rates reaching 12.5% in 1981.

Question 19

List the Bank of Canada's four main monetary goals.

Accepted Answer

The answer of List the Bank of Canada's four main...

Question 20

The goals of monetary policy tend to be interrelated.For example, when the Bank of Canada pursues the goal of ________, it also can achieve the goal of ________ simultaneously.
A)high employment; economic growth
B)high employment; lowering government spending
C)economic growth; a low current account deficit
D)stability of financial markets; a low current account deficit
E)price stability; low budget deficits

Accepted Answer

Pursuing the goal of high employment usually leads to an increase in economic growth as more people are employed and have more disposable income to spend. Therefore, these goals often go hand in hand.

Quiz 11: Monetary Policy

One of the monetary policy goals of the Bank of Canada is price stability.

The turmoil in financial markets that began in 2007 led the Bank of Canada to put new emphasis on

Monetary policy is conducted by the federal Department of Finance.

The Bank of Canada focuses on which of the following as their main goal of monetary policy?

What is a symmetric inflation targeting, and what does it mean for the Bank of Canada?

Monetary policy refers to the actions the Bank of Canada takes to manage

Monetary policy refers to the actions the

The Bank of Canada does not regulate financial institutions, but it does act as the "lender of last resort" by lending to commercial banks when they are temporarily short of funds.The goal of the Bank of Canada filling this role is to

Central banks around the world have pursued historically low interest rates in an effort to

The Bank of Canada system's four monetary policy goals are

If the probability of losing your job remains , a recession would be a good time to purchase a home because the Bank of Canada usually interest rates during this time.

The main goal of monetary policy for the Bank of Canada recently has been to maintain high employment in labour markets.

Since World War II, the Bank of Canada has not been involved in carrying out monetary policy.

When the Bank of Canada Act was passed in 1934, it was stated that the main responsibility is to conduct monetary policy to

Which of the following are goals of monetary policy?

The Bank of Canada seeks to promote stability of financial markets because

Why would businesses watch the bank of Canada for signs of changing interest rates?

Inflation rates during the years 1979-1981 were the highest Canada has ever experienced post-1950.

List the Bank of Canada's four main monetary goals.

The goals of monetary policy tend to be interrelated.For example, when the Bank of Canada pursues the goal of , it also can achieve the goal of simultaneously.