How Has the Bank of Canada Historically Viewed Changes in Reserve

question 58

Multiple Choice

How has the Bank of Canada historically viewed changes in reserve requirements to control the money supply?

• A) It has been gradually lowering the reserve requirements to keep inflation rates low.
• B) It has traditionally made frequent changes in order to stabilize the economy.
• C) It has been reluctant to make frequent changes as this would disrupt the business of banking.
• D) It has been gradually increasing the reserve requirements to keep inflation rates low.

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Definitions:

Indirect Approach

A method of communication or problem-solving that is not straightforward, often involving suggestion or implication rather than direct statements.

Investing Activities

Financial operations that involve the purchase and sale of long-term assets and other investments not considered cash equivalents.

Financing Activities

Refers to the transactions and events that affect long-term liabilities and equity of a company, including issuing debt, selling shares, and paying dividends.

Direct Approach

A method of income statement preparation where expenses are listed directly against revenue items to show the net income.