450 $
© 2014 Pearson Canada Inc.$15.7 Explaining Central Bank Behaviour
The theory of bureaucratic behaviour suggests that the objective of a bureaucracy is to
maximize ____.
A) the public's welfare
B) profits
C) its own welfare
D) conflict with the executive and legislative branches of government
Answer: C
Diff: 2 Type: MC Page Ref: 365
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
The theory of bureaucratic behavior suggests that a consumer's behaviour is motivated by the
____.
A) maximization of personal welfare
B) maximization social welfare
C) minimization of government intervention
D) minimization political pressure
Answer: A
Diff: 2 Type: MC Page Ref: 365
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
The theory of bureaucratic behaviour suggests that the Bank of Canada will fight ____.
A) to preserve the public's welfare
B) to maximize profits
C) minimize its own welfare
D) to preserve autonomy
Answer: D
Diff: 2 Type: MC Page Ref: 365
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
What is the theory of bureaucratic behavior and how can it be used to explain the behavior of
the Bank of Canada?
Answer: The theory of bureaucratic behavior concludes that the main objective of any
bureaucracy is to maximize its own welfare, which is related to power and prestige. This can
explain why the Bank of Canada has defended its autonomy, and will avoid conflict with
powerful groups that might threaten to curtail its power and reduce its autonomy.
Diff: 1 Type: SA Page Ref: 365
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