Due to the Lack of Timely Data for the Price

question 55

Multiple Choice

Due to the lack of timely data for the price level and economic growth, the Bank of Canada's strategy ________.

• A) targets the exchange rate, since the Bank of Canada can control this variable
• B) targets the price of gold, since it is closely related to economic activity
• C) uses an intermediate target, such as an interest rate
• D) stabilizes the consumer price index, since the Bank of Canada can control the CPI

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Definitions:

Reserves

Funds or commodities set aside for future use or held as a buffer against unforeseen shortages or financial emergencies.

Discount Rate

The interest rate charged by central banks on loans to commercial banks, influencing monetary policy and liquidity.

Money Supply

The cumulative sum of money, including cash, coins, and the funds deposited in checking and savings accounts, accessible in an economy at a definite point in time.

Reserve Requirement

The mandate by central banks determining the minimum amount of reserves that must be held by a commercial bank, directly affecting the bank's capacity to lend.