Which of the Following Statements Is TRUE

question 111

Multiple Choice

Which of the following statements is TRUE?

• A)The interest rates that banks offer on investments or charge on loans is independent of the time horizon of the investment or loan.
• B)The Bank of Canada determines very short-term interest rates through its influence on the federal funds rate.
• C)The interest rates that are quoted by banks and other financial institutions are real interest rates.
• D)Fundamentally,interest rates are determined by the Bank of Canada.
• E)If interest rates are expected to fall in the future,long-term rates will tend to be higher than short-term rates.

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Definitions:

Demand Deposits

Bank accounts that allow the holder to withdraw funds without advance notice, often used for day-to-day expenses.

Federal Reserve Bank

One of the 12 regional banks of the Federal Reserve System, each serving a specific geographic area of the United States, involved in banking and monetary policy.

First Bankers

Early financial intermediaries who accepted deposits, facilitated loans, and created ways to transfer wealth across great distances.

Goldsmiths

Historically, skilled artisans who made objects out of gold, but in economic context, also referred to as early bankers who issued loans and held deposits.