How Has the Bank of Canada Historically Viewed Changes in Reserve

question 58

Multiple Choice

How has the Bank of Canada historically viewed changes in reserve requirements to control the money supply?

• A) It has been gradually lowering the reserve requirements to keep inflation rates low.
• B) It has traditionally made frequent changes in order to stabilize the economy.
• C) It has been reluctant to make frequent changes as this would disrupt the business of banking.
• D) It has been gradually increasing the reserve requirements to keep inflation rates low.

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Definitions:

Interest Rate

The percentage of a loan amount charged by the lender to the borrower for the use of assets, typically expressed on an annual basis.

Face Value

The nominal or dollar value printed on a financial instrument, such as a bond or stock certificate, representing its legal value.

Promissory Note

A financial document in which one party promises in writing to pay a determinate sum of money to the other, either at a fixed or determinable future time or on demand of the payee, under specific terms.

Accounts Receivable

Amounts owed to a business by its customers for goods or services delivered or used but not yet paid for.