the economics of money, banking, and financial markets

513 #

© 2014 Pearson Canada Inc.#

28. 
    

    If the Bank of Canada charges for negative settlement balances to LVTS participants an
    interest rate of 3.5 percent then the operating target of the Bank's monetary policy is ____.
    A) 3.25 percent
    B) 3.75 percent
    C) 3 percent
    D) 4 percent
    Answer: A
    Diff: 2 Type: MC Page Ref: 406
    Skill: Applied
    Objective List: 17.1 Characterize the framework for the implementation of monetary policy in
    Canada

    
    


29. 
    

    The lower limit of the operating band for the overnight interest rate defines ____.
    A) the bank rate
    B) the prime rate
    C) the rate the Bank of Canada pays LVTS participants with positive settlement balances at the
    end of the banking day
    D) the rate the Bank of Canada charges LVTS participants with negative settlement balances at
    the end of the banking day
    Answer: C
    Diff: 1 Type: MC Page Ref: 406
    Skill: Recall
    Objective List: 17.1 Characterize the framework for the implementation of monetary policy in
    Canada

    
    


30. 
    

    At the end of each banking day, each LVTS participant must bring its settlement balance
    with the Bank of Canada ____.
    A) close to zero
    B) to a positive balance
    C) to a negative balance
    D) to at least $1 million
    Answer: A
    Diff: 1 Type: MC Page Ref: 406
    Skill: Recall
    Objective List: 17.1 Characterize the framework for the implementation of monetary policy in
    Canada