Question 1

When the overnight rate is up to 50 basis points below the bank rate ________.

Accepted Answer

A)  the supply curve of settlement balances has a positive slope 
B)  the demand curve for settlement balances is vertical 
C)  the demand curve for settlement balances is horizontal 
D)  the demand curve for settlement balances has a negative slope 
A)  the supply curve of settlement balances has a positive slope 
B)  the demand curve for settlement balances is vertical 
C)  the demand curve for settlement balances is horizontal 
D)  the demand curve for settlement balances has a negative slope

Question 2

If the Bank of Canada wants to alleviate undesired downward pressure on the overnight financing rate it will enter into a ________.

Accepted Answer

A)  Purchase and Resale Agreement 
B)  Repurchase Agreement 
C)  Swap 
D)  Reverse Repo 
A)  Purchase and Resale Agreement 
B)  Repurchase Agreement 
C)  Swap 
D)  Reverse Repo

Question 3

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 4

The overnight rate is important because it is ________.

Accepted Answer

A)  the primary indicator of the Bank of Canada's stance on monetary policy 
B)  the interest rate paid on federal debt 
C)  the interest rate charged on government loans 
D)  Both A and C of the above. 
A)  the primary indicator of the Bank of Canada's stance on monetary policy 
B)  the interest rate paid on federal debt 
C)  the interest rate charged on government loans 
D)  Both A and C of the above.

Question 5

The Bank of Canada neutralizes SRA operations so as to ________.

Accepted Answer

A)  not to leave the system in a surplus position at the end of the day 
B)  to leave the system in a surplus position at the end of the day 
C)  as not to leave the system in a deficit position at the end of the day 
D)  as to leave the system in a deficit position at the end of the day 
A)  not to leave the system in a surplus position at the end of the day 
B)  to leave the system in a surplus position at the end of the day 
C)  as not to leave the system in a deficit position at the end of the day 
D)  as to leave the system in a deficit position at the end of the day

Question 6

When the Bank of Canada lowers the operating band for the overnight interest rate,it ________.

Accepted Answer

A)  lowers the bank rate by the same amount 
B)  encourages LVTS participants to borrow reserves either from each other or from the Bank of Canada 
C)  it reduces the monetary base and ultimately the money supply 
D)  Only A and B of the above. 
A)  lowers the bank rate by the same amount 
B)  encourages LVTS participants to borrow reserves either from each other or from the Bank of Canada 
C)  it reduces the monetary base and ultimately the money supply 
D)  Only A and B of the above.

Question 7

A standing lending facility is ________.

Accepted Answer

A)  the facility at which banks can borrow reserves from the Bank of Canada 
B)  a temporary lending facility 
C)  a permanent lending facility 
D)  a daily lending facility 
A)  the facility at which banks can borrow reserves from the Bank of Canada 
B)  a temporary lending facility 
C)  a permanent lending facility 
D)  a daily lending facility

Question 8

A rise in the overnight rate ________.

Accepted Answer

A)  decreases the opportunity cost of holding desired reserves 
B)  lowers the opportunity cost of holding desired reserves 
C)  increases the opportunity cost of holding excess reserves 
D)  lowers the opportunity cost of holding excess reserves 
A)  decreases the opportunity cost of holding desired reserves 
B)  lowers the opportunity cost of holding desired reserves 
C)  increases the opportunity cost of holding excess reserves 
D)  lowers the opportunity cost of holding excess reserves

Question 9

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

When the overnight rate is up to 50 basis points below the bank rate ________.

If the Bank of Canada wants to alleviate undesired downward pressure on the overnight financing rate it will enter into a ________.

The quantity of reserves demanded rises when the ________.

The overnight rate is important because it is ________.

The Bank of Canada neutralizes SRA operations so as to ________.

When the Bank of Canada lowers the operating band for the overnight interest rate,it ________.

A standing lending facility is ________.

A rise in the overnight rate ________.

Quantitative easing is regarded as ________.

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

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

The ISLM Model

Filters

Exam 17: Tools of Monetary Policy

When the overnight rate is up to 50 basis points below the bank rate ________.

If the Bank of Canada wants to alleviate undesired downward pressure on the overnight financing rate it will enter into a ________.

The quantity of reserves demanded rises when the ________.

The overnight rate is important because it is ________.

The Bank of Canada neutralizes SRA operations so as to ________.

When the Bank of Canada lowers the operating band for the overnight interest rate,it ________.

A standing lending facility is ________.

A rise in the overnight rate ________.

Quantitative easing is regarded as ________.

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

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

The ISLM Model

Filters