When the Bank of Canada wants to lower the real interest rate in Canada,it announces a ________ overnight rate target (and the entire operating band around the overnight rate target shifts ______).In response,the commercial banks ________ the market interest rates,particularly,the short-term rates,by a similar amount.
A) higher;down;raise
B) lower;up;lower
C) lower;down;lower
D) higher;up;raise
E) lower;down;up

Question

Quizplus · Accepted Answer

When the Bank of Canada wants to lower the real interest rate, it announces a lower overnight rate target, which results in a decrease in market interest rates, particularly short-term rates. Therefore, the entire operating band around the overnight rate target shifts down, and the commercial banks lower the market interest rates by a similar amount.

When the Bank of Canada Wants to Lower the Real