The Ability of the Bank of Canada to Use Monetary

question 50

Multiple Choice

The ability of the Bank of Canada to use monetary policy to affect economic variables such as real GDP ultimately depends upon its ability to affect

• A)tax rates.
• B)real interest rates.
• C)nominal interest rates.
• D)foreign exchange rates.
• E)commercial bank reserves.

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Definitions:

Interest Annually

The payment received or paid out for the use of money on a yearly basis.

Principal Due

The amount of the original loan or bond issue that is still owed, excluding interest payments.

Discount Rate

The interest rate used to discount future cash flows to their present value, important in the evaluation of investment opportunities.

Monthly Payments

Regular payments made over a period of time, often associated with loans or leases.