the economics of money, banking, and financial markets

515 #

© 2014 Pearson Canada Inc.#

34. 
    

    The operating band for the overnight interest rate is ____.
    A) 50 basis points wide
    B) defines the rate of interest the Bank of Canada charges LVTS participants with negative
    settlement balances at the end of the banking day
    C) defines the rate of interest the Bank of Canada pays LVTS participants with negative
    settlement balances at the end of the banking day
    D) Both A and B of the above.
    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

    
    


35. 
    

    Standing facilities ____.
    A) refers to participant borrowing form each other to bring their settlement balances to zero at
    the end of the banking day
    B) refers to the Bank of Canada refusal to lend to or borrow from a participant to bring
    their settlement balances to zero at the end of the banking day
    C) refers to the Bank of Canada's building in Ottawa
    D) refers to the Bank of Canada being ready to lend to or borrow from a participant to bring
    their settlement balances to zero at the end of the banking day
    Answer: D
    Diff: 3 Type: MC Page Ref: 406
    Skill: Recall
    Objective List: 17.1 Characterize the framework for the implementation of monetary policy in
    Canada

    
    


36. 
    

    When the Bank of Canada lowers the operating band for the overnight interest rate, it
    ____.
    A) lowers the bank rate by the same amount
    B) encourages LVTS participants to borrow reserves either from each other or from the Bank of
    Canada
    C) it reduces the monetary base and ultimately the money supply
    D) Only A and B of the above.
    Answer: D
    Diff: 1 Type: MC Page Ref: 408
    Skill: Applied
    Objective List: 17.1 Characterize the framework for the implementation of monetary policy in
    Canada