Which of the following statements is false?
A) The interest rates that banks offer on investments or charge on loans depends on the horizon of the investment or loan.
B) The Bank of Canada determines very short-term interest rates through its influence on the federal funds rate.
C) The interest rates that are quoted by banks and other financial institutions are nominal interest rates.
D) Fundamentally, interest rates are determined by the Bank of Canada.

Question

Quizplus · Accepted Answer

The statement that interest rates are fundamentally determined by the Bank of Canada is false. While the Bank of Canada does play a role in setting monetary policy and influencing interest rates, interest rates are ultimately determined by supply and demand in the market. Factors such as economic conditions, inflation expectations, and global events also impact interest rates.

Which of the Following Statements Is False