the economics of money, banking, and financial markets

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23. 
    

    The Bank of Canada ultimate objective is ____.
    A) price stability
    B) to keep interest rates low
    C) economic growth
    D) low unemployment
    Answer: A
    Diff: 2 Type: MC Page Ref: 357
    Skill: Recall
    Objective List: 15.2 Identify the Bank of Canada's functions and degree of independence and
    specify the arguments for and against an independent central bank

    
    


24. 
    

    The responsibility of monetary policy in Canada was given by the 1967 Bank of Canada Act
    to the ____.
    A) government
    B) Bank of Canada
    C) provincial governments
    D) parliament
    Answer: A
    Diff: 2 Type: MC Page Ref: 357
    Skill: Recall
    Objective List: 15.2 Identify the Bank of Canada's functions and degree of independence and
    specify the arguments for and against an independent central bank

    
    


25. 
    

    What are the main functions of the Bank of Canada? describe them briefly.
    Answer: The main functions of the Bank of Canada are:
    a. Bank note issue: Since 1967 the Bank of Canada with the revision of the Bank Act was
    provided with unlimited powers to issue legal tender. The Bank also tries to preserve the
    integrity and safety of Canadian currency.
    b. Government debt and asset management services: The Bank of Canada in its role as the
    government's fiscal agent provides debt-management services for the federal government such as
    advising on borrowings, managing new debt offerings and servicing outstanding debt.
    c. Central banking services: The bank of Canada serves as the lender of last resort for the
    deposit-taking financial institutions. It also plays a central role in Canada's national payments
    system. Finally the Bank acts as the holder of deposit accounts for the government.
    d. Monetary policy: The Bank of Canada employs tools such as open market operations to
    conduct monetary policy. The Bank's ultimate objective is to keep inflation low so that steady
    economic growth is achieved.
    Diff: 3 Type: SA Page Ref: 356 - 357
    Skill: Recall
    Objective List: 15.2 Identify the Bank of Canada's functions and degree of independence and
    specify the arguments for and against an independent central bank