In Practice,it Is Not Possible for the Bank of Canada

question 21

Multiple Choice

In practice,it is not possible for the Bank of Canada to control the money supply because

• A)the resulting effects on the value of the Canadian dollar are difficult to predict.
• B)it cannot control the process of deposit creation carried out by the commercial banks.
• C)it cannot control the amount of cash reserves that are injected into or withdrawn from the banking system.
• D)it does not have the legal power to do so.
• E)None of the above-the Bank of Canada could control the money supply if it chose to do so.

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Definitions:

Retain Information

The ability to maintain and keep information in memory over time.

Memory

The cognitive process involving the encoding, storing, and retrieving of information experienced or learned.

Encoding Failure

an inability to properly store information into long-term memory, leading to the absence of memory recall.

Recall

The mental process of retrieving information from the past, which can vary in ease depending on several factors like recency and relevance.