To Reduce Short- Term Market Interest Rates, the Bank of Canada

question 21

Multiple Choice

To reduce short- term market interest rates, the Bank of Canada could

• A)decrease the commercial banks' reserves.
• B)adjust the rate paid on Treasury bills.
• C)decrease the money supply directly.
• D)reduce the commercial banks' reserve requirements.
• E)reduce its target for the overnight rate.

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Definitions:

Automatic Response

An involuntary or reflex action that occurs in response to a stimulus without conscious thought.

Evaluative Reaction

Judgements or feelings about the value or worth of something, based on a rapid assessment.

Affects

The experience of feeling or emotion.

Emotions

Complex psychological states involving three components: a subjective experience, a physiological response, and a behavioral or expressive response.