Exam 16: Tools of Monetary Policy

Describe some of the actions the Bank of Canada took to mitigate the effects of widening spreads and increased volatility in the term interbank market in the second half of 2008.

If government deposits at the Bank of Canada are predicted to increase, the manager of the trading desk at the Bank will likely conduct activities to ________ reserves.

What are the advantages of SPRAs and SRAs?

The Bank of Canada neutralizes government receipts by ________.

The lower limit of the operating band for the overnight interest rate is ________.

In addition to targeting the overnight interest rate at the mid-point of the operating band, the Bank of Canada also targets ________.

If the operating target of the Bank of Canada is 4 percent then the bank rate is ________.

A reverse repo is a ________.

Explain why the bank rate is an upper limit for the overnight rate.

At the end of each banking day, each LVTS participant must bring its settlement balance with the Bank of Canada ________.

The ACSS is operated by the ________.

A rise in the overnight rate ________.

45 basis points is equal to ________.

The difference between Term PRAs and special PRAs, is that term PRAs have ________.

If government deposits at the Bank of Canada are predicted to decrease the Bank will offset the transaction through LVTS transfers to ________ settlement balances.

If the Bank of Canada expects the economy to to be exceeding its capacity, it ________ the operating band for the overnight interest rate.

LVTS participants with positive settlement balances at the end of the day ________.

A standing lending facility is ________.

The opportunity cost of holding excess reserves is ________.

What is the function of the ACSS?