An Example of an Arrangement That Helps to Enforce Commitment

question 36

Multiple Choice

An example of an arrangement that helps to enforce commitment by a central bank is

• A)New Zealand's Policy Targets Agreement.
• B)the Bank of Canada's interest rate target.
• C)an independent central bank.
• D)deposit insurance.
• E)the lender of last resort.

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Definitions:

Return on Investment

A performance measure used to evaluate the efficiency or profitability of an investment or compare the efficiency of several different investments.

Variable Costs

Variable costs are expenses that change in proportion to the activity of a business, such as sales volumes.

Controllable Fixed Costs

Expenses that do not change with production level but can be altered or managed by decisions at the management level.

Average Operating Assets

The average value of the assets that are used in the day-to-day operations of a business, calculated over a specific period.