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© 2014 Pearson Canada Inc.#17.3 The Bank of Canada's Approach to Monetary Policy
The goal of the Bank of Canada's current monetary policy is to keep the inflation rate within a
target range of ____.
A) 2 percent to 3 percent
B) 1 percent to 3 percent
C) 1 percent to 4 percent
D) 2 percent to 4 percent
Answer: B
Diff: 1 Type: MC Page Ref: 411
Skill: Recall
Objective List: 17.2 Explain the market for reserves and the channel/corridor system for setting
the overnight interest rate in Canada
Monetary conditions are impacted by ____.
A) short-term interest rates and the foreign exchange rate
B) open market operations and the prime rate
C) the foreign exchange rate and the inflation rate
D) the Department of Finance
Answer: A
Diff: 1 Type: MC Page Ref: 412
Skill: Recall
Objective List: 17.1 Characterize the framework for the implementation of monetary policy in
Canada
3 ) Core CPI excludes ____.
A) volatile components
B) headline items
C) indirect taxes
D) energy costs
Answer: A
Diff: 1 Type: MC Page Ref: 412
Skill: Recall
Objective List: 17.1 Characterize the framework for the implementation of monetary policy in
Canada
- If the Bank of Canada expects the economy to slow down, it ____ the operating band for
the overnight interest rate.
A) lowers
B) raises
C) leaves unchanged
D) stabilizes
Answer: A
Diff: 1 Type: MC Page Ref: 413
Skill: Recall
Objective List: 17.2 Explain the market for reserves and the channel/corridor system for setting
the overnight interest rate in Canada