Which of the Following Statements Best Describes the Relationship Between

question 66

Multiple Choice

Which of the following statements best describes the relationship between the Bank of Canada and the Government of Canada?

• A)The Bank of Canada has the same status as the Department of Finance and is directly responsible to Parliament for its day-to-day operations of monetary policy.
• B)The Bank of Canada is a wholly owned entity of the government but is given independence in the day-to-day operations of monetary policy.
• C)The Bank of Canada is a central-banking institution that is completely independent of the government and is fully autonomous in its conduct of monetary policy.
• D)The Bank of Canada is a privately owned banking institution that is overseen by a Board of Directors with a mandate to act in the best interests of the citizens of Canada.
• E)The governor of the Bank of Canada and the minister of finance have joint responsibility for both fiscal and monetary policy.

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Definitions:

Nominal Value

The face value of a financial instrument or an item's price in terms of money, without adjustment for inflation or other factors.

Price Level

The ongoing average price for the economy's produced goods and services.

Consumer Price Index

An indicator that calculates the weighted mean of the cost of a collection of consumer products and services, including transportation, food, and healthcare, employed to gauge inflation rates.

Inflation Rate

The enhancement of the overall price tag of goods and services in an economy throughout a specific period.