Question 1

Quantitative easing is regarded as ________.

Accepted Answer

A)  the price of liquidity 
B)  a high-risk monetary policy tool 
C)  a low-risk monetary policy tool 
D)  a desired policy 
A)  the price of liquidity 
B)  a high-risk monetary policy tool 
C)  a low-risk monetary policy tool 
D)  a desired policy

Question 2

The Automated Clearing Settlement System (ACSS) ________.

Accepted Answer

A)  was introduced on February 4, 1999 
B)  is an electronic net settlement network designed to provide settlement to wholesale transactions 
C)  aggregates interbank payments and informs the Bank of Canada of the net amounts to be transferred from and to each participant's settlement account with the Bank of Canada 
D)  A and B only. 
A)  was introduced on February 4, 1999 
B)  is an electronic net settlement network designed to provide settlement to wholesale transactions 
C)  aggregates interbank payments and informs the Bank of Canada of the net amounts to be transferred from and to each participant's settlement account with the Bank of Canada 
D)  A and B only.

Question 3

The market equilibrium, in which the quantity of reserves demanded equals the quantity of reserves supplied ________.

Accepted Answer

A)  determines the overnight rate 
B)  occurs at the intersection of the vertical supply curve and the demand curve at the Bank of Canada's target level of reserves 
C)  determines the interest rate charged on loans of these reserves 
D)  All of the above. 
A)  determines the overnight rate 
B)  occurs at the intersection of the vertical supply curve and the demand curve at the Bank of Canada's target level of reserves 
C)  determines the interest rate charged on loans of these reserves 
D)  All of the above.

Question 4

In the market for settlement balances, when the overnight interest rate is below the bank rate and above the bank rate less 50 basis points, the supply curve of reserves is ________.

Accepted Answer

A)  vertical 
B)  horizontal 
C)  positively sloped 
D)  negatively sloped 
A)  vertical 
B)  horizontal 
C)  positively sloped 
D)  negatively sloped

Question 5

Large Value Transfer System (LVTS) participants can make a payment only if they ________.

Accepted Answer

A)  have positive settlement balances in their accounts with the Bank of Canada 
B)  have posted collateral (such as Government of Canada treasury bills and bonds) 
C)  have explicit lines of credit with other participants 
D)  All of the above. 
A)  have positive settlement balances in their accounts with the Bank of Canada 
B)  have posted collateral (such as Government of Canada treasury bills and bonds) 
C)  have explicit lines of credit with other participants 
D)  All of the above.

Question 6

If the Bank of Canada wants to temporarily inject reserves in the banking system, it will engage in ________.

Accepted Answer

A)  a repurchase agreement 
B)  a "swap" transaction 
C)  a reverse repurchase agreement 
D)  None of the above. 
A)  a repurchase agreement 
B)  a "swap" transaction 
C)  a reverse repurchase agreement 
D)  None of the above.

Question 7

Sale and Repurchase Agreements ________.

Accepted Answer

A)  relieve undesired upward pressure on the overnight interest rate 
B)  alleviate undesired downward pressure on the overnight financing rate 
C)  relieve undesired downward pressure on the overnight interest rate 
D)  alleviate undesired volatility in the overnight financing rate 
A)  relieve undesired upward pressure on the overnight interest rate 
B)  alleviate undesired downward pressure on the overnight financing rate 
C)  relieve undesired downward pressure on the overnight interest rate 
D)  alleviate undesired volatility in the overnight financing rate

Question 8

Quantitative easing is regarded as an unconventional form of monetary policy because it targets the ________.

Accepted Answer

A)  the price of liquidity 
B)  the overnight interest rate 
C)  the amount of liquidity provided by the central bank instead of targeting the price of liquidity 
D)  settlement balances 
A)  the price of liquidity 
B)  the overnight interest rate 
C)  the amount of liquidity provided by the central bank instead of targeting the price of liquidity 
D)  settlement balances

Question 9

The quantity of reserves demanded rises when the ________.

Accepted Answer

A)  bank rate rises 
B)  bank rate falls 
C)  overnight funds rate rises 
D)  overnight rate falls 
A)  bank rate rises 
B)  bank rate falls 
C)  overnight funds rate rises 
D)  overnight rate falls

Question 10

Monetary conditions are impacted by ________.

Accepted Answer

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 
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

Quantitative easing is regarded as ________.

The Automated Clearing Settlement System (ACSS) ________.

The market equilibrium, in which the quantity of reserves demanded equals the quantity of reserves supplied ________.

In the market for settlement balances, when the overnight interest rate is below the bank rate and above the bank rate less 50 basis points, the supply curve of reserves is ________.

Large Value Transfer System (LVTS) participants can make a payment only if they ________.

If the Bank of Canada wants to temporarily inject reserves in the banking system, it will engage in ________.

Sale and Repurchase Agreements ________.

Quantitative easing is regarded as an unconventional form of monetary policy because it targets the ________.

The quantity of reserves demanded rises when the ________.

Monetary conditions are impacted by ________.

Why Study Money, Banking, and Financial Markets

An Overview of the Financial System

What Is Money

The Meaning of Interest Rates

The Behaviour of Interest Rates

The Risk and Term Structure of Interest Rates

The Stock Market, the Theory of Rational Expectations, and the Efficient Market Hypothesis

An Economic Analysis of Financial Structure

Economic Analysis of Financial Regulation

Banking Industry: Structure and Competition

Financial Crises

Banking and the Management of Financial Institutions

Risk Management With Financial Derivatives

Central Banks and the Bank of Canada

The Money Supply Process

The Conduct of Monetary Policy: Strategy and Tactics

The Foreign Exchange Market

The International Financial System

Quantity Theory, Inflation, and the Demand for Money

The Is Curve

The Monetary Policy and Aggregate Demand Curves

Aggregate Demand and Supply Analysis

Monetary Policy Theory

The Role of Expectations in Monetary Policy

Transmission Mechanisms of Monetary Policy

Filters

Exam 16: Tools of Monetary Policy

Quantitative easing is regarded as ________.

The Automated Clearing Settlement System (ACSS) ________.

The market equilibrium, in which the quantity of reserves demanded equals the quantity of reserves supplied ________.

In the market for settlement balances, when the overnight interest rate is below the bank rate and above the bank rate less 50 basis points, the supply curve of reserves is ________.

Large Value Transfer System (LVTS) participants can make a payment only if they ________.

If the Bank of Canada wants to temporarily inject reserves in the banking system, it will engage in ________.

Sale and Repurchase Agreements ________.

Quantitative easing is regarded as an unconventional form of monetary policy because it targets the ________.

The quantity of reserves demanded rises when the ________.

Monetary conditions are impacted by ________.

Why Study Money, Banking, and Financial Markets

An Overview of the Financial System

What Is Money

The Meaning of Interest Rates

The Behaviour of Interest Rates

The Risk and Term Structure of Interest Rates

The Stock Market, the Theory of Rational Expectations, and the Efficient Market Hypothesis

An Economic Analysis of Financial Structure

Economic Analysis of Financial Regulation

Banking Industry: Structure and Competition

Financial Crises

Banking and the Management of Financial Institutions

Risk Management With Financial Derivatives

Central Banks and the Bank of Canada

The Money Supply Process

The Conduct of Monetary Policy: Strategy and Tactics

The Foreign Exchange Market

The International Financial System

Quantity Theory, Inflation, and the Demand for Money

The Is Curve

The Monetary Policy and Aggregate Demand Curves

Aggregate Demand and Supply Analysis

Monetary Policy Theory

The Role of Expectations in Monetary Policy

Transmission Mechanisms of Monetary Policy

Filters