Question 1

Monetary policy is conducted by the federal Department of Finance.

Accepted Answer

Monetary policy is actually conducted by the central bank, which in the case of the United States is the Federal Reserve System, not the federal Department of Finance.

Question 2

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

C

Question 3

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 many central banks, is primarily to control inflation and maintain price stability, although it also considers employment levels as part of its broader economic objectives.

Question 4

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

Accepted Answer

Price stability is one of the primary goals of the Bank of Canada's monetary policy. This means keeping inflation low, stable, and predictable over the medium term.

Question 5

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 caused the Bank of Canada to put new emphasis on increasing financial market stability, as instability in financial markets can have negative impacts on the overall economy. The other choices may still be important goals for the Bank of Canada, but in the context of the question, financial market stability was the priority.

Question 6

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. Choice A includes goals related to government and current account deficits and foreign exchange value, which are not included in the Bank of Canada's stated goals. Choice B includes goals related to bank failures and reserve ratios, which are not stated goals of the Bank of Canada. Choice D includes three of the four goals stated by the Bank of Canada, but also includes a goal related to government budget deficits which is not explicitly stated as a goal. Choice E includes goals related to retirement savings, which are not directly related to the Bank of Canada's monetary policy goals. Therefore, choice C is the best answer.

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 refers to the actions taken by the central bank, in this case the Bank of Canada, to manage the money supply and interest rates to achieve its macroeconomic policy objectives, such as stabilizing prices and promoting economic growth. The Prime Minister and Parliament have a role in setting economic policies and budgets, but monetary policy specifically refers to the actions of the central bank. The other options are incorrect as they do not accurately describe monetary policy.

Question 8

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 can lead to economic growth as a result of increased consumer spending and business investment.

Question 9

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

Accepted Answer

During this period, Canada experienced double-digit inflation rates, with a peak of 12.5% in 1981, making it the highest inflation Canada has experienced post-1950.

Question 10

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 are meant to encourage consumers to spend more by making borrowing cheaper, which in turn is meant to shift aggregate demand to the right.

Question 11

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.

Question 12

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 involves keeping inflation low and stable over the long term. While the Bank of Canada also considers other factors such as employment and economic growth in its decision-making, its primary objective is price stability.

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 involved in carrying out monetary policy.

Question 14

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

A recession usually leads to job losses, but if the probability of losing your job remains low, then it could be a good time to purchase a home due to lower interest rates. The Bank of Canada usually lowers interest rates during a recession to stimulate the economy, making it cheaper to borrow money for a mortgage.

Question 15

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 what...

Question 16

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 the central bank (Bank of Canada) takes to manage the money supply and interest rates in the economy to achieve its macroeconomic objectives such as controlling inflation, stabilizing the economy, and promoting economic growth. It does not involve managing income tax rates or government spending, which falls under fiscal policy.

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, such as cars and homes. Sales of these goods are likely to rise when the Bank of Canada lowers the interest rate, which can have a significant impact on businesses in those industries.

Question 18

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

Accepted Answer

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

Question 19

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 Bank of Canada acts as the "lender of last resort" to reassure financial markets and promote financial stability by providing commercial banks with temporary funding when they are unable to obtain it from other sources. This helps to prevent widespread panic and instability in the financial system.

Question 20

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 answer of When the Bank of Canada Act was...

Quiz 11: Monetary Policy

Monetary policy is conducted by the federal Department of Finance.

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

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

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

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

Monetary policy refers to the actions the

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.

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

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

Which of the following are goals of monetary policy?

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

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

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.

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

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

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

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

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