Question 1

Base money is also know as ________.

Accepted Answer

A)  monetary base 
B)  power money 
C)  monetary liability 
D)  fund accounts 
A)  monetary base 
B)  power money 
C)  monetary liability 
D)  fund accounts A

Question 2

The Executive Board of the European Central Bank ________.

Accepted Answer

A)  consists of the European Central Bank's president, vice president, and four other members 
B)  is responsible for the business of the European Central Bank 
C)  is responsible for the implementation of monetary policy in accordance with the guidelines set by the Governing Council 
D)  All of the above. 
A)  consists of the European Central Bank's president, vice president, and four other members 
B)  is responsible for the business of the European Central Bank 
C)  is responsible for the implementation of monetary policy in accordance with the guidelines set by the Governing Council 
D)  All of the above. D

Question 3

The Great Depression ________.

Accepted Answer

A)  was of fundamental importance in the creation of the Bank of Montreal 
B)  contributed to significant changes in government policy 
C)  involved the largest increase in the level of economic activity in the history of Canada 
D)  contributed to significant changes in foreign affairs policy 
A)  was of fundamental importance in the creation of the Bank of Montreal 
B)  contributed to significant changes in government policy 
C)  involved the largest increase in the level of economic activity in the history of Canada 
D)  contributed to significant changes in foreign affairs policy B

Question 4

Which of the following are entities of the Eurosystem?

Accepted Answer

A)  The European Central Bank 
B)  The central banks of the European Union countries that have adopted the euro 
C)  The central banks of the euro area countries and of the European Union countries that have not yet adopted the euro 
D)  Only A and B of the above 
A)  The European Central Bank 
B)  The central banks of the European Union countries that have adopted the euro 
C)  The central banks of the euro area countries and of the European Union countries that have not yet adopted the euro 
D)  Only A and B of the above

Question 5

Treasury bills are a responsibility of ________.

Accepted Answer

A)  the Bank of Canada 
B)  Canada Investment and Savings 
C)  Ministry of the Treasury 
D)  the federal government 
A)  the Bank of Canada 
B)  Canada Investment and Savings 
C)  Ministry of the Treasury 
D)  the federal government

Question 6

The ability of a central bank to set monetary policy goals is ________.

Accepted Answer

A)  political independence 
B)  goal independence 
C)  policy independence 
D)  instrument independence 
A)  political independence 
B)  goal independence 
C)  policy independence 
D)  instrument independence

Question 7

Recent research indicates that inflation performance (low inflation)has been found to be best in countries with ________.

Accepted Answer

A)  the most independent central banks 
B)  the least independent central banks 
C)  political control of monetary policy 
D)  a policy of always keeping interest rates low 
A)  the most independent central banks 
B)  the least independent central banks 
C)  political control of monetary policy 
D)  a policy of always keeping interest rates low

Question 8

Of the major central banks of the world,the most independent is ________.

Accepted Answer

A)  the Federal Reserve System 
B)  the European Central Bank 
C)  the Bank of Canada 
D)  the Bank of England 
A)  the Federal Reserve System 
B)  the European Central Bank 
C)  the Bank of Canada 
D)  the Bank of England

Question 9

Unemployment rates in Canada after the Great Depression rose close to ________.

Accepted Answer

A)  20 percent 
B)  25 percent 
C)  30 percent 
D)  10 percent 
A)  20 percent 
B)  25 percent 
C)  30 percent 
D)  10 percent

Question 10

Recent research has found that countries with the most independent central banks have experienced ________.

Accepted Answer

A)  the lowest average rates of inflation 
B)  rates of inflation no different from countries with less independent central banks 
C)  the highest average rates of inflation 
D)  high inflation from financing deficits 
A)  the lowest average rates of inflation 
B)  rates of inflation no different from countries with less independent central banks 
C)  the highest average rates of inflation 
D)  high inflation from financing deficits

Question 11

Putting the Bank of Canada under control of the government ________.

Accepted Answer

A)  may place too much pressure on the Bank of Canada to finance federal budget deficits 
B)  impart an inflationary bias to monetary policy 
C)  generate a political business cycle, in which just before an election contractionary policies are pursued to raise unemployment and interest rates 
D)  may cause only A and B of the above 
A)  may place too much pressure on the Bank of Canada to finance federal budget deficits 
B)  impart an inflationary bias to monetary policy 
C)  generate a political business cycle, in which just before an election contractionary policies are pursued to raise unemployment and interest rates 
D)  may cause only A and B of the above

Question 12

Critics of the current system of Bank of Canada independence contend that ________.

Accepted Answer

A)  the current system is undemocratic 
B)  voters have too much say about monetary policy 
C)  the governor has too much control over monetary policy on a day-today basis 
D)  Both B and C of the above are true. 
A)  the current system is undemocratic 
B)  voters have too much say about monetary policy 
C)  the governor has too much control over monetary policy on a day-today basis 
D)  Both B and C of the above are true.

Question 13

According to the author of your textbook,the Federal Reserve is ________.

Accepted Answer

A)  remarkably free of the political pressures that influence other government agencies 
B)  more responsive to the political pressures that influence other government agencies 
C)  probably somewhat constrained in its policy making by the congressional threat to reduce Fed independence 
D)  Both A and C of the above. 
A)  remarkably free of the political pressures that influence other government agencies 
B)  more responsive to the political pressures that influence other government agencies 
C)  probably somewhat constrained in its policy making by the congressional threat to reduce Fed independence 
D)  Both A and C of the above.

Question 14

While legislation enacted in 1998 granted the Bank of Japan new powers and greater autonomy,its critics contend that its independence is ________.

Accepted Answer

A)  limited by the Ministry of Finance's control over a portion of its budget 
B)  too great because it need not pursue a policy of price stability even if that is the popular will of the people 
C)  too great since the Ministry of Finance no longer has veto power over the bank's budget 
D)  limited since the Ministry of Finance can dismiss senior bank officials 
A)  limited by the Ministry of Finance's control over a portion of its budget 
B)  too great because it need not pursue a policy of price stability even if that is the popular will of the people 
C)  too great since the Ministry of Finance no longer has veto power over the bank's budget 
D)  limited since the Ministry of Finance can dismiss senior bank officials

Question 15

All of the following have served as Bank of Canada governors except for ________.

Accepted Answer

A)  Roy Romanow 
B)  David Dodge 
C)  Gordon Thiessen 
D)  John Crow 
A)  Roy Romanow 
B)  David Dodge 
C)  Gordon Thiessen 
D)  John Crow

Question 16

Countries with the most independent central banks have low inflation ________.

Accepted Answer

A)  but have higher unemployment than countries with less independent central banks 
B)  but have higher output fluctuations than countries with less independent central banks 
C)  and have lower rates of unemployment than countries with less independent central banks 
D)  but have no higher unemployment or output fluctuations than countries with less independent central banks 
A)  but have higher unemployment than countries with less independent central banks 
B)  but have higher output fluctuations than countries with less independent central banks 
C)  and have lower rates of unemployment than countries with less independent central banks 
D)  but have no higher unemployment or output fluctuations than countries with less independent central banks

Question 17

From 1929 to 1933 the Canadian real GDP fell by almost ________.

Accepted Answer

A)  30 percent 
B)  40 percent 
C)  50 percent 
D)  20 percent 
A)  30 percent 
B)  40 percent 
C)  50 percent 
D)  20 percent

Question 18

Bank of Canada started operations in ________.

Accepted Answer

A)  1935 
B)  1925 
C)  1915 
D)  1945 
A)  1935 
B)  1925 
C)  1915 
D)  1945

Question 19

Canada's national payments system currently clears and settles payments and transactions,at a volume that is currently ________ times our annual GDP.

Accepted Answer

A)  15 
B)  10 
C)  5 
D)  2 
A)  15 
B)  10 
C)  5 
D)  2

Question 20

Which of the following statements are true of the Bank of England?

Accepted Answer

A)  The Bank of England was established in 1894. 
B)  Until 1997, the decision to raise or lower interest rates resided not with the Bank of England but with the chancellor of the Exchequer. 
C)  The government can overrule the Bank and set rates "in extreme economic circumstances" and "for a limited period." 
D)  Both B and C of the above. 
A)  The Bank of England was established in 1894. 
B)  Until 1997, the decision to raise or lower interest rates resided not with the Bank of England but with the chancellor of the Exchequer. 
C)  The government can overrule the Bank and set rates "in extreme economic circumstances" and "for a limited period." 
D)  Both B and C of the above.

Exam 15: Central Banks and the Bank of Canada

Base money is also know as ________.

The Executive Board of the European Central Bank ________.

The Great Depression ________.

Which of the following are entities of the Eurosystem?

Treasury bills are a responsibility of ________.

The ability of a central bank to set monetary policy goals is ________.

Recent research indicates that inflation performance (low inflation)has been found to be best in countries with ________.

Of the major central banks of the world,the most independent is ________.

Unemployment rates in Canada after the Great Depression rose close to ________.

Recent research has found that countries with the most independent central banks have experienced ________.

Putting the Bank of Canada under control of the government ________.

Critics of the current system of Bank of Canada independence contend that ________.

According to the author of your textbook,the Federal Reserve is ________.

While legislation enacted in 1998 granted the Bank of Japan new powers and greater autonomy,its critics contend that its independence is ________.

All of the following have served as Bank of Canada governors except for ________.

Countries with the most independent central banks have low inflation ________.

From 1929 to 1933 the Canadian real GDP fell by almost ________.

Bank of Canada started operations in ________.

Canada's national payments system currently clears and settles payments and transactions,at a volume that is currently ________ times our annual GDP.

Which of the following statements are true of the Bank of England?

Why Study Money, banking, and Financial Markets

An Overview of the Financial System

What Is Money

Understanding 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

Financial Crises

Economic Analysis of Financial Regulation

Banking Industry: Structure and Competition

Nonbank Finance

Banking and the Management of Financial Institutions

Risk Management With Financial Derivatives

The Money Supply Process

Tools of Monetary Policy

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

The ISLM Model

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