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Due to the lack of timely data for the price level and economic growth, the Bank of Canada's
strategy ____.
A) targets the exchange rate, since the Bank of Canada can control this variable
B) targets the price of gold, since it is closely related to economic activity
C) uses an intermediate target, such as an interest rate
D) stabilizes the consumer price index, since the Bank of Canada can control the CPI
Answer: C
Diff: 1 Type: MC Page Ref: 454
Skill: Recall
Objective List: 18.1 Assess the different types of monetary policy strategy
If the central bank targets a monetary aggregate, it is likely to lose control over the interest
rate because ____.
A) of fluctuations in the demand for reserves
B) of fluctuations in the consumption function
C) bond values will tend to remain stable
D) of fluctuations in the business cycle
Answer: A
Diff: 2 Type: MC Page Ref: 455
Skill: Recall
Objective List: 18.1 Assess the different types of monetary policy strategy
Fluctuations in the demand for reserves cause the Bank of Canada to lose control over a
monetary aggregate if the Bank of Canada targets ____.
A) a monetary aggregate
B) the monetary base
C) an interest rate
D) nominal GDP
Answer: C
Diff: 2 Type: MC Page Ref: 455
Skill: Recall
Objective List: 18.1 Assess the different types of monetary policy strategy
Interest rates are difficult to measure because ____.
A) data on them are not available in a timely manner
B) real interest rates depend on the hard-to-determine expected inflation rate
C) they fluctuate too often to be accurate
D) they cannot be controlled by the Bank of Canada
Answer: B
Diff: 1 Type: MC Page Ref: 455 - 456
Skill: Recall
Objective List: 18.1 Assess the different types of monetary policy strategy