How Can the Bank of Canada Use the Bank Rate

question 96

Multiple Choice

How can the Bank of Canada use the bank rate to regulate the overnight loans rate?

• A)The overnight loans rate is set at a quarter percentage point above the bank rate, which in turn is set by the Bank of Canada.
• B)The bank rate is set at the settlement balances rate plus 0.25 percentage points.
• C)The bank rate is set at 0.25 percentage points below the settlement balances rate, which is used to determine the overnight loans rate.
• D)The overnight loans rate is set at 25 basis points above the bank rate.
• E)The bank rate is set at the target overnight rate plus 0.25 percentage points.

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Definitions:

Wage Increases

Adjustments made to the salary of employees, typically to account for inflation, performance, or changes in the cost of living.

Leisure

Free time available to an individual excluding time spent on work, domestic activities, and essential needs.

Labor Market

The supply of available workers in relation to available work, influenced by factors such as wages, demand, and employment laws.

Households

Entities consisting of one or more people who live together and make joint decisions on consumption and other economic activities.