Under its current operating procedure,the Bank of Canada implements monetary policy by announcing a target for the ________,and then intervenes (if necessary)in the _______ in order to maintain this rate within a _______ percentage-point operating band above and below this target.
A) overnight rate;overnight loan market; 0.50
B) prime business rate;money markets; 0.25
C) overnight rate;money markets; 0.25
D) overnight rate;overnight loan market; 0.25
E) overnight rate;money markets;0.50

Question

Under its current operating procedure,the Bank of Canada implements monetary policy by announcing a target for the ________,and then intervenes (if necessary)in the _______ in order to maintain this rate within a _______ percentage-point operating band above and below this target.
A) overnight rate;overnight loan market; 0.50 
B) prime business rate;money markets; 0.25 
C) overnight rate;money markets; 0.25 
D) overnight rate;overnight loan market; 0.25 
E) overnight rate;money markets;0.50

Quizplus · Accepted Answer

The Bank of Canada currently uses the overnight rate as its target for monetary policy. It then intervenes in the overnight loan market to maintain this rate within a 0.25 percentage-point operating band above and below this target. Therefore, the correct choice is D - overnight rate; overnight loan market; 0.25.

Under Its Current Operating Procedure,the Bank of Canada Implements Monetary