Question 1

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 D

Question 2

Instrument independence is ________.

Accepted Answer

A) the ability of the central bank to set monetary policy goals 
B) the ability of the government to set monetary policy goals 
C) the ability of the government to set monetary policy instruments 
D) the ability of the central bank to set monetary policy instruments 
A) the ability of the central bank to set monetary policy goals 
B) the ability of the government to set monetary policy goals 
C) the ability of the government to set monetary policy instruments 
D) the ability of the central bank to set monetary policy instruments D

Question 3

The Bank of Canada ultimate objective is ________.

Accepted Answer

A) price stability 
B) to keep interest rates low 
C) economic growth 
D) low unemployment 
A) price stability 
B) to keep interest rates low 
C) economic growth 
D) low unemployment A

Question 4

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) B and C only 
A) The Office of the Superintendent of Financial Institutions (OSFI) 
B) The Governing Council 
C) The Board of Directors 
D) B and C only

Question 5

The purchase and sale of government securities by the Bank of Canada is known as ________.

Accepted Answer

A) open market buyback operations 
B) repurchase agreements 
C) interbank borrowing 
D) monetary base transactions 
A) open market buyback operations 
B) repurchase agreements 
C) interbank borrowing 
D) monetary base transactions

Question 6

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

Accepted Answer

A) In recent years, with the exception of the Bank of England and the Bank of Japan, most countries have reduced the independence of their central banks, subjecting them to greater democratic control. 
B) Before the Bank of England was granted greater independence, the Federal Reserve was the most independent of the world's central banks. 
C) Both theory and experience suggest that more independent central banks produce better monetary policy. 
D) While the European Central Bank is independent, it is not as independent as the Federal Reserve. 
A) In recent years, with the exception of the Bank of England and the Bank of Japan, most countries have reduced the independence of their central banks, subjecting them to greater democratic control. 
B) Before the Bank of England was granted greater independence, the Federal Reserve was the most independent of the world's central banks. 
C) Both theory and experience suggest that more independent central banks produce better monetary policy. 
D) While the European Central Bank is independent, it is not as independent as the Federal Reserve.

Question 7

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 8

Increased operational independence by the Bank of Canada has also raised the standards for ________.

Accepted Answer

A) accountability 
B) secrecy 
C) misconduct 
D) confusion 
A) accountability 
B) secrecy 
C) misconduct 
D) confusion

Question 9

Because of its unique power to ________ base money, the Bank of Canada can ease the liquidity problems of ________.

Accepted Answer

A) create; financial institutions 
B) create; provincial governments 
C) save; financial institutions 
D) save; provincial governments 
A) create; financial institutions 
B) create; provincial governments 
C) save; financial institutions 
D) save; provincial governments

Question 10

The board of governors members of the federal reserve system in the U.S. are appointed by the ________ and confirmed by the ________.

Accepted Answer

A) president; senate 
B) president; house of representatives 
C) senate; president 
D) house of representatives; president 
A) president; senate 
B) president; house of representatives 
C) senate; president 
D) house of representatives; president

Question 11

The Maastricht Treaty which established the European Central Bank, defined price stability as an inflation rate equal to ________.

Accepted Answer

A) It did not specify exactly. 
B) 0 percent 
C) 1 percent 
D) 2 percent 
A) It did not specify exactly. 
B) 0 percent 
C) 1 percent 
D) 2 percent

Question 12

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

Question 13

What are the main differences between the European system of Central Banks and the Federal Reserve System?

Accepted Answer

Although their structure is similar some

Question 14

The Eurosystem has a structure like that of the ________.

Accepted Answer

A) Bank of Canada 
B) Federal Reserve System 
C) Bank of England 
D) Swiss National Bank 
A) Bank of Canada 
B) Federal Reserve System 
C) Bank of England 
D) Swiss National Bank

Question 15

In its role as provider of paper money, the Bank of Canada ________.

Accepted Answer

A) works closely with private sector partnerships and note-issuing authorities in other countries in order to improve cost-effectiveness, increase the durability of Canadian bank notes, and reduce counterfeiting 
B) tries to preserve the integrity and safety of Canadian currency in the most economical and efficient manner possible 
C) None of the above. 
D) A and B only. 
A) works closely with private sector partnerships and note-issuing authorities in other countries in order to improve cost-effectiveness, increase the durability of Canadian bank notes, and reduce counterfeiting 
B) tries to preserve the integrity and safety of Canadian currency in the most economical and efficient manner possible 
C) None of the above. 
D) A and B only.

Question 16

The benefit of the Ban k of Canada's role as the lender-of-last-resort include ________.

Accepted Answer

A) easing liquidity problems of any financial institution 
B) deterring bank runs and panics 
C) reducing the monetary base to increase liquidity 
D) A and B only 
A) easing liquidity problems of any financial institution 
B) deterring bank runs and panics 
C) reducing the monetary base to increase liquidity 
D) A and B only

Question 17

Which of the following statements about central bank structure and independence are NOT true?

Accepted Answer

A) In recent years, with the exception of the Bank of England and the Bank of Japan, most countries have reduced the independence of their central banks, subjecting them to greater democratic control. 
B) Before the Bank of England was granted greater independence, the Federal Reserve was the most independent of the world's central banks. 
C) Both theory and experience suggest that more independent central banks produce better monetary policy. 
D) A and B only 
A) In recent years, with the exception of the Bank of England and the Bank of Japan, most countries have reduced the independence of their central banks, subjecting them to greater democratic control. 
B) Before the Bank of England was granted greater independence, the Federal Reserve was the most independent of the world's central banks. 
C) Both theory and experience suggest that more independent central banks produce better monetary policy. 
D) A and B only

Question 18

The oldest central bank, having been founded in 1656, is the ________.

Accepted Answer

A) Riksbank, the central bank of Sweden 
B) Deutsche Bundesbank 
C) Bank of Japan 
D) Federal Reserve System 
A) Riksbank, the central bank of Sweden 
B) Deutsche Bundesbank 
C) Bank of Japan 
D) Federal Reserve System

Question 19

The oldest central bank, having been founded in 1694, is the ________.

Accepted Answer

A) Bank of England 
B) Deutsche Bundesbank 
C) Bank of Japan 
D) Federal Reserve System 
A) Bank of England 
B) Deutsche Bundesbank 
C) Bank of Japan 
D) Federal Reserve System

Question 20

The Bank of Canada's goal of low inflation is closely tied to ________.

Accepted Answer

A) economic growth 
B) price volatility 
C) low interest rates 
D) growth in the money supply 
A) economic growth 
B) price volatility 
C) low interest rates 
D) growth in the money supply

Exam 14: Central Banks and the Bank of Canada

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

Instrument independence is ________.

The Bank of Canada ultimate objective is ________.

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

The purchase and sale of government securities by the Bank of Canada is known as ________.

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

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

Increased operational independence by the Bank of Canada has also raised the standards for ________.

Because of its unique power to ________ base money, the Bank of Canada can ease the liquidity problems of ________.

The board of governors members of the federal reserve system in the U.S. are appointed by the ________ and confirmed by the ________.

The Maastricht Treaty which established the European Central Bank, defined price stability as an inflation rate equal to ________.

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

What are the main differences between the European system of Central Banks and the Federal Reserve System?

The Eurosystem has a structure like that of the ________.

In its role as provider of paper money, the Bank of Canada ________.

The benefit of the Ban k of Canada's role as the lender-of-last-resort include ________.

Which of the following statements about central bank structure and independence are NOT true?

The oldest central bank, having been founded in 1656, is the ________.

The oldest central bank, having been founded in 1694, is the ________.

The Bank of Canada's goal of low inflation is closely tied to ________.

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

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

Financial Crises in Emerging Markets

The ISLM Model

Non-Bank Finance

Filters

Because of its unique power to base money, the Bank of Canada can ease the liquidity problems of .

The board of governors members of the federal reserve system in the U.S. are appointed by the and confirmed by the .