When the Bank of Canada changes its key official interest rate,in response the commercial banks in the country
A) change market interest rates (particularly short-term ones)by the same amount and in the same direction.
B) change market interest rates (particularly short-term ones)by the same amount in the opposite direction.
C) leave market interest rates unchanged (particularly short-term ones).
D) change only the prime business rate they charge their least risky customers.
E) leave the prime business rate unchanged.

Question

Quizplus · Accepted Answer

When the Bank of Canada changes its key official interest rate, the commercial banks in the country usually follow suit by changing their market interest rates, particularly short-term ones, by the same amount and in the same direction. This is because they are directly influenced by the central bank's policy and aim to maintain a competitive edge in the market.

When the Bank of Canada Changes Its Key Official Interest