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© 2014 Pearson Canada Inc.#
The Bank of Canada's repurchase transactions are an advantage because ____.
A) they occur at the initiative of the Bank of Canada
B) the bank has complete control over the volume
C) they are monopolized by the Bank of Canada
D) Only A and B of the above.
Answer: D
Diff: 2 Type: MC Page Ref: 417
Skill: Applied
Objective List: 17.3 Identify the Bank of Canada's approach to monetary policy and the tools of
policy
If the Bank of Canada wants to temporarily inject reserves in the banking system, it will
engage in ____.
A) a repurchase agreement
B) a "swap" transaction
C) a reverse repurchase agreement
D) None of the above.
Answer: A
Diff: 2 Type: MC Page Ref: 415 - 416
Skill: Applied
Objective List: 17.3 Identify the Bank of Canada's approach to monetary policy and the tools of
policy
If the Bank of Canada wants to temporarily drain reserves from the banking system, it will
engage in ____.
A) a repurchase agreement
B) a sale and repurchase agreement
C) a "pump" agreement
D) None of the above.
Answer: B
Diff: 2 Type: MC Page Ref: 416 - 417
Skill: Applied
Objective List: 17.3 Identify the Bank of Canada's approach to monetary policy and the tools of
policy
The Bank of Canada will engage in a repurchase agreement when it wants to ____
reserves ____ in the banking system.
A) increase; permanently
B) increase; temporarily
C) decrease; temporarily
D) decrease; permanently
Answer: B
Diff: 2 Type: MC Page Ref: 415 - 416
Skill: Applied
Objective List: 17.3 Identify the Bank of Canada's approach to monetary policy and the tools of
policy