Question 1

In its responsibility for the government's operating accounts,the Bank of Canada ________.

Accepted Answer

A)  shifts balances between accounts at the Bank of Canada and the banks 
B)  shifts balances between chartered banks 
C)  sells Canada Savings Bonds on behalf of the federal government 
D)  manages foreign exchange transactions 
A)  shifts balances between accounts at the Bank of Canada and the banks 
B)  shifts balances between chartered banks 
C)  sells Canada Savings Bonds on behalf of the federal government 
D)  manages foreign exchange transactions

Question 2

The Bank of Canada serves as a lender of last ________ when a deposit-taking financial institution faces a ________ crisis.

Accepted Answer

A)  resort; liquidity 
B)  minute; liquidity 
C)  resort; profitability 
D)  minute; profitability 
A)  resort; liquidity 
B)  minute; liquidity 
C)  resort; profitability 
D)  minute; profitability

Question 3

Which of the following is an element of the Bank of Canada?

Accepted Answer

A)  The Office of the Superintendent of Financial Institutions (OSFI) 
B)  The Governing Council 
C)  The Board of Directors 
D)  Only B and C of the above are Bank of Canada entities. 
A)  The Office of the Superintendent of Financial Institutions (OSFI) 
B)  The Governing Council 
C)  The Board of Directors 
D)  Only B and C of the above are Bank of Canada entities.

Question 4

The Bank of Canada assumed the monopoly of issuing bank notes in ________.

Accepted Answer

A)  1945 
B)  1939 
C)  1940 
D)  1949 
A)  1945 
B)  1939 
C)  1940 
D)  1949

Question 5

The Board of Directors appoints the governor of the Bank of Canada for a renewable term of ________ years.

Accepted Answer

A)  seven 
B)  five 
C)  eight 
D)  six 
A)  seven 
B)  five 
C)  eight 
D)  six

Question 6

Supporters of the current system of Bank of Canada independence believe that a less autonomous Bank would ________.

Accepted Answer

A)  adopt a short-run bias toward policymaking 
B)  pursue overly expansionary monetary policies 
C)  be more likely to create a political business cycle 
D)  do each of the above 
A)  adopt a short-run bias toward policymaking 
B)  pursue overly expansionary monetary policies 
C)  be more likely to create a political business cycle 
D)  do each of the above

Question 7

Which of the following statements concerning an independent central bank are true?

Accepted Answer

A)  Politicians may prefer an independent central bank, as it can be used as a "whipping boy" or "scapegoat" for poor economic performance. 
B)  Politicians in a democratic society may be shortsighted because of their desire to win reelection; thus, the political process may generate a political business cycle, in which just before an election expansionary policies are pursued to lower unemployment and interest rates. 
C)  Putting the Bank of Canada under control of the government may place too much pressure on the Bank to finance federal budget deficits, thereby imparting an inflationary bias to monetary policy. 
D)  All of the above are true statements. 
A)  Politicians may prefer an independent central bank, as it can be used as a "whipping boy" or "scapegoat" for poor economic performance. 
B)  Politicians in a democratic society may be shortsighted because of their desire to win reelection; thus, the political process may generate a political business cycle, in which just before an election expansionary policies are pursued to lower unemployment and interest rates. 
C)  Putting the Bank of Canada under control of the government may place too much pressure on the Bank to finance federal budget deficits, thereby imparting an inflationary bias to monetary policy. 
D)  All of the above are true statements.

Question 8

Which of the following are entities of the Bank of Canada?

Accepted Answer

A)  The Office of the Superintendent of Financial Institutions (OSFI) 
B)  The Governing Council 
C)  The Canada Deposit Insurance Corporation (CDI
C)  
D)  The Federal Reserve 
A)  The Office of the Superintendent of Financial Institutions (OSFI) 
B)  The Governing Council 
C)  The Canada Deposit Insurance Corporation (CDI
C)  
D)  The Federal Reserve

Question 9

Which of the following are entities of the Federal Reserve System?

Accepted Answer

A)  Federal Reserve Banks 
B)  The FOMC 
C)  The Board of Advisors 
D)  Both A and B 
A)  Federal Reserve Banks 
B)  The FOMC 
C)  The Board of Advisors 
D)  Both A and B

Question 10

Goal independence is the ability of ________ to set monetary policy ________.

Accepted Answer

A)  the central bank; goals 
B)  Congress; goals 
C)  Congress; instruments 
D)  the central bank; instruments 
A)  the central bank; goals 
B)  Congress; goals 
C)  Congress; instruments 
D)  the central bank; instruments

Question 11

The Bank of Canada's lender-of-last resort lending is coordinated with ________ and ________.

Accepted Answer

A)  Office of the Superintendent of Financial Institutions Canada; Canada Deposit Insurance Corporation 
B)  Office of the Superintendent of Financial Institutions Canada; the Department of Finance 
C)  the Department of Finance; Canada Deposit Insurance Corporation 
D)  Office of the Superintendent of Financial Institutions Canada; Canada Investment and Savings 
A)  Office of the Superintendent of Financial Institutions Canada; Canada Deposit Insurance Corporation 
B)  Office of the Superintendent of Financial Institutions Canada; the Department of Finance 
C)  the Department of Finance; Canada Deposit Insurance Corporation 
D)  Office of the Superintendent of Financial Institutions Canada; Canada Investment and Savings

Question 12

In its role as the federal government's fiscal agent,the Bank of Canada provides debt management services for the federal government such as ________.

Accepted Answer

A)  advising on provincial government borrowings 
B)  managing new debt offerings by the federal government 
C)  servicing the federal government's outstanding debt 
D)  Both B and C of the above. 
A)  advising on provincial government borrowings 
B)  managing new debt offerings by the federal government 
C)  servicing the federal government's outstanding debt 
D)  Both B and C of the above.

Question 13

Which of the following statements about central bank structure and independence are true?

Accepted Answer

A)  In recent years there has been a remarkable trend toward increasing independence. 
B)  In recent years, greater independence has been granted to many central banks, with the exception of the Bank of England and the Bank of Japan, which are still subject to strict governmental control. 
C)  In theory, central banks subject to government control produce better monetary policy, but experience suggests that more independent central banks have produced superior monetary policy results. 
D)  Only A and B of the above are true statements. 
A)  In recent years there has been a remarkable trend toward increasing independence. 
B)  In recent years, greater independence has been granted to many central banks, with the exception of the Bank of England and the Bank of Japan, which are still subject to strict governmental control. 
C)  In theory, central banks subject to government control produce better monetary policy, but experience suggests that more independent central banks have produced superior monetary policy results. 
D)  Only A and B of the above are true statements.

Question 14

In its role as provider of central banking services,the Bank of Canada holds deposit accounts of the ________.

Accepted Answer

A)  provincial governments 
B)  directly clearing members of the Canadian Payments Association 
C)  international organizations, such as the International Monetary Fund 
D)  Both B and C of the above. 
A)  provincial governments 
B)  directly clearing members of the Canadian Payments Association 
C)  international organizations, such as the International Monetary Fund 
D)  Both B and C of the above.

Question 15

Which of the following is not an entity of the Federal Reserve System?

Accepted Answer

A)  Federal Reserve Banks 
B)  The FDIC 
C)  The Board of Governors 
D)  The Board of Advisors 
A)  Federal Reserve Banks 
B)  The FDIC 
C)  The Board of Governors 
D)  The Board of Advisors

Question 16

Explain two concepts of central bank independence.Is the Bank of Canada politically independent? Why do economists think central bank independence is important?

Accepted Answer

Instrument independence is the ability o

Question 17

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

Accepted Answer

A)  The Bank of England was established in 1919. 
B)  The governor and four deputy governors comprise the monetary policy making body. 
C)  Until 1997, the decision to raise or lower interest rates resided not with the Bank of England but with the chancellor of the Exchequer. 
D)  Both B and C of the above. 
A)  The Bank of England was established in 1919. 
B)  The governor and four deputy governors comprise the monetary policy making body. 
C)  Until 1997, the decision to raise or lower interest rates resided not with the Bank of England but with the chancellor of the Exchequer. 
D)  Both B and C of the above.

Question 18

Which of the following functions does the Bank of Canada perform?

Accepted Answer

A)  Bank note issue 
B)  Municipal government fiscal policy management 
C)  Provincial government fiscal policy management 
D)  Advise the Federal Reserve 
A)  Bank note issue 
B)  Municipal government fiscal policy management 
C)  Provincial government fiscal policy management 
D)  Advise the Federal Reserve

Question 19

Changes in the ________ lead to ________ changes in the money supply.

Accepted Answer

A)  monetary base; multiple 
B)  monetary base; equal 
C)  inflation rate; multiple 
D)  inflation rate; equal 
A)  monetary base; multiple 
B)  monetary base; equal 
C)  inflation rate; multiple 
D)  inflation rate; equal

Question 20

Politicians in a democratic society may be shortsighted because of their desire to win reelection; thus,the political process can ________.

Accepted Answer

A)  impart an inflationary bias to monetary policy 
B)  impart a deflationary bias to monetary policy 
C)  generate a political business cycle, in which just before an election expansionary policies are pursued to lower unemployment and interest rates 
D)  cause both A and C of the above 
A)  impart an inflationary bias to monetary policy 
B)  impart a deflationary bias to monetary policy 
C)  generate a political business cycle, in which just before an election expansionary policies are pursued to lower unemployment and interest rates 
D)  cause both A and C of the above

Exam 15: Central Banks and the Bank of Canada

In its responsibility for the government's operating accounts,the Bank of Canada ________.

The Bank of Canada serves as a lender of last ________ when a deposit-taking financial institution faces a ________ crisis.

Which of the following is an element of the Bank of Canada?

The Bank of Canada assumed the monopoly of issuing bank notes in ________.

The Board of Directors appoints the governor of the Bank of Canada for a renewable term of ________ years.

Supporters of the current system of Bank of Canada independence believe that a less autonomous Bank would ________.

Which of the following statements concerning an independent central bank are true?

Which of the following are entities of the Bank of Canada?

Which of the following are entities of the Federal Reserve System?

Goal independence is the ability of ________ to set monetary policy ________.

The Bank of Canada's lender-of-last resort lending is coordinated with ________ and ________.

In its role as the federal government's fiscal agent,the Bank of Canada provides debt management services for the federal government such as ________.

Which of the following statements about central bank structure and independence are true?

In its role as provider of central banking services,the Bank of Canada holds deposit accounts of the ________.

Which of the following is not an entity of the Federal Reserve System?

Explain two concepts of central bank independence.Is the Bank of Canada politically independent? Why do economists think central bank independence is important?

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

Which of the following functions does the Bank of Canada perform?

Changes in the ________ lead to ________ changes in the money supply.

Politicians in a democratic society may be shortsighted because of their desire to win reelection; thus,the political process can ________.

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

Filters

The Bank of Canada serves as a lender of last when a deposit-taking financial institution faces a crisis.

Goal independence is the ability of to set monetary policy .

The Bank of Canada's lender-of-last resort lending is coordinated with and .

Changes in the lead to changes in the money supply.