In the Event of a Sudden Loss in Confidence in the Ability

question 39

Multiple Choice

In the event of a sudden loss in confidence in the ability of the commercial banks to redeem deposits,the Bank of Canada would probably

• A)take over the operation of any banks in severe difficulties.
• B)lend reserves to the commercial banks.
• C)offer to sell government bonds to the chartered banks.
• D)suspend operation of the banking system until the panic subsided.
• E)impose severe financial penalties on the commercial banks by charging them interest at higher than the Bank rate.

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Definitions:

Unjust Dismissal

Termination of employment that is deemed unfair or without proper legal cause, giving rise to legal action by the dismissed employee.

Vindicate

To clear from blame or suspicion; to justify, prove, or reinforce the correctness of someone's actions or a particular stance.

Party and Party Basis

A legal term referring to the assessment of legal costs that are to be paid by one party to another in a lawsuit.

Contribution Margin

The amount by which sales revenue exceeds variable costs, contributing to covering fixed costs and generating profit.