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Under the current "joint responsibility system," ____.
A) the Bank of Canada does not have considerable autonomy in the conduct of day-to-day
monetary policy
B) in the event of a serious policy conflict the minister of finance can issue a directive that the
Bank of Canada must follow
C) the government has no responsibility for the policy being followed by the Bank of Canada
D) the Bank of Canada has full responsibility for monetary policy
Answer: B
Diff: 2 Type: MC Page Ref: 360
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
Explain the joint responsibility system.
Answer: Under the joint responsibility system, the governor of the Bank of Canada and the
minister of finance, acting on behalf of the government, consult regularly and, in the event of a
serious disagreement over the conduct of monetary policy, the government has the right to
override the Bank's decisions. In particular, the minister of finance can issue a directive to the
Bank indicating the specific policy changes that the Bank must follow. The directive, however,
must be published indicating not only the new policy that the Bank is supposed to undertake but
also the period during which it is to apply.
Diff: 2 Type: SA Page Ref: 360
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