the economics of money, banking, and financial markets

560 $

© 2014 Pearson Canada Inc.$

20. 
    

    The midpoint of the Bank of Canada's inflation target range is ____.
    A) 3 percent
    B) 2 percent
    C) 1 percent
    D) None of the above.
    Answer: B
    Diff: 1 Type: MC Page Ref: 466
    Skill: Applied
    Objective List: 18.4 Outline Bank of Canada policy procedures from a historical perspective

    
    


21. 
    

    In its most recent attempt in lowering the inflation rate, the Bank of Canada announces
    explicit targets for the rate of change in "core CPI," because ____.
    A) core CPI excludes volatile components, such as food, energy, and the effect of indirect taxes
    B) core inflation is useful in assessing whether trend inflation is on track for the medium term
    C) Both A and B of the above.
    D) None of the above.
    Answer: C
    Diff: 1 Type: MC Page Ref: 466
    Skill: Recall
    Objective List: 18.4 Outline Bank of Canada policy procedures from a historical perspective

    
    


22. 
    

    Bank of Canada policy since 1989 suggests ____.
    A) that it is finally using a monetary aggregate as its intermediate target
    B) that it is less concerned with fluctuations in the overnight interest rate
    C) that it is more concerned with exchange rates than with interest rates
    D) None of the above.
    Answer: D
    Diff: 1 Type: MC Page Ref: 466
    Skill: Recall
    Objective List: 18.4 Outline Bank of Canada policy procedures from a historical perspective

    
    


23. 
    

    The Bank of Canada can engage in preemptive strikes against a rise in inflation by ____
    the overnight rate; it can act preemptively against negative demand shocks by ____ the
    overnight rate.
    A) raising; lowering
    B) raising; raising
    C) lowering; lowering
    D) lowering; raising
    Answer: A
    Diff: 1 Type: MC Page Ref: 468
    Skill: Recall
    Objective List: 18.4 Outline Bank of Canada policy procedures from a historical perspective