What Is the Reason Behind the Seven-Year Appointment for the Governor

question 137

Multiple Choice

What is the reason behind the seven-year appointment for the governor of Bank of Canada?

• A) It makes the system compatible with the ones in other countries.
• B) It confers stability to the financial system.
• C) It allows the governor time to implement changes and to analyze the results of those changes.
• D) It insulates the governor from political pressure.

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Definitions:

Capital

Financial assets or the financial value of assets, such as cash, properties, and machinery, used in a business to generate wealth.

Inflation-Adjusted

Inflation-adjusted refers to financial figures that have been modified to account for the effects of inflation, providing a more accurate comparison over time.

Nominal Rate

The interest rate stated on a loan or financial product, not adjusted for inflation, representing the face value of the interest charged or earned.

Real Rate

The interest rate adjusted for inflation, representing the real cost of borrowing or the true return on investment, removing the inflationary impact.