Q. What is the Bank of Canada's monetary policy instrument? How is the overnight loans rate...
Q. What is the Bank of Canada's monetary policy instrument? How is the overnight loans rate determined in the market for bank reserves?
Homework Answers
Bank of Canada monetary policy instruments are discount rate, open market operations, reserve ratio and overnight loan rates.
The overnight loans rates are determined by the availability of reserve and its demand and supply in the banks, if the reserves are low with the bank then in that case the overnight loan rates will be high and If he reserves are high with the banks then the loan rates will be low. the Central bank of Canada influence it by open market operations where the sell and buy bonds to increase and decrease reserves.
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Q. What is the Bank of Canada's monetary policy instrument? How
is the overnight loans rate...
If the Bank of Canada's target for the overnight rate is 1.75% while the actual overnight...
If the Bank of Canada's target for the overnight rate is 1.75% while the actual overnight rate is 1.70%, the appropriate monetary policy for the Bank of Canada would be to buy government securities in the open market. True False
Questions: a) Select a monetary policy instrument and explain how to use the instrument to implement...
Questions: a) Select a monetary policy instrument and explain how to use the instrument to implement monetary policy to ease the effects of a severe recession. b) Use the concept of the cause chain effect to indicate (e.g. rise, fall and or stay the same) how each of the following will be effected with this policy. i) Excess reserves il) Money Supply iii) Interes rates iv) Investment v) Aggregate demand vi) Real GDP
How do the Bank of Canada's actions change the exchange rate? When the Bank of Canada...
How do the Bank of Canada's actions change the exchange rate? When the Bank of Canada lowers the overnight loans rate, the Canadian interest rate differential and other things remaining the same, the Canadian dollar O A falls; depreciates O B. fallis; appreciates OC rises, appreciates OD. rises depreciates
The following table shows two monetary policy rules. Inflation Policy Rule 1 Targeet Overnight Rate Policy...
The following table shows two monetary policy rules. Inflation Policy Rule 1 Targeet Overnight Rate Policy Rule 2 Target Overnight Rate 0 1 3 2 3 5 4 5 7 6 7 9 8 9 11 a. Graph the two policy rules. Suppose the Bank of Canada shifts from policy rule 1 to policy rule 2. b. For any given rate of inflation, what happens to the interest rate because of this change in policy? What happens to the...
Suppose the Bank of Canada raises the overnight loans rate. Describe the ripple effects of this...
Suppose the Bank of Canada raises the overnight loans rate. Describe the ripple effects of this monetary policy. Other short-term interest rates and the exchange rate Consumption expenditure, investment, and net exports The quantity of money and supply of loanable funds Aggregate demand Real GDP growth and the inflation rate O A. rise; increase OB. fall; decrease O c. fall; increase OD. rise; decrease O A. decreases; decrease OB. increases; decrease or remain the same O c. decreases; increase or...
Describe the channels by which monetary policy ripples through the economy and explain how each channel...
Describe the channels by which monetary policy ripples through the economy and explain how each channel operates. Suppose the Bank of Canada raises the overnight loans rate. When the Bank of Canada raises the overnight loans rate, it makes an open market Other short-term interest rates and the exchange rate rise. The quantity of money and the supply of loanable funds decrease The long-term real interest rate rises The higher real interest rate decreases consumption expenditure and investment. The exchange...
The __________ is the rate financial institutions charge each other for overnight loans used as reserves,...
The __________ is the rate financial institutions charge each other for overnight loans used as reserves, while the __________ is the rate that the Fed charges depository institutions to borrow reserves from a regional Federal Reserve Bank. federal funds rate / prime rate discount rate / secondary rate federal funds rate / discount rate discount rate / prime rate
want to know the answer for both the questions....thanksss ASAP 1. In The News: Bank of...
want to know the answer for both the
questions....thanksss ASAP
1. In The News: Bank of Canada increases overnight rate Canada increases overnight rate target to 14 per cent October 24, 2018- The Bank of Canada today increased its target for the to 1 34 per cent. The Bank Rate is correspondingly 2 per cent and y increased its target for the overnight rate 12 per cent is correspondingly 2 per cent and the deposit rate is 1 Questions: a)...
explain and draw the use of easy monetary policy on the AD-AS model explain what occurs...
explain and draw the use of easy monetary policy on the AD-AS model explain what occurs when The Fed "buys bonds" 1. You are given this account for a bank Assets Liabilities Reserves $450 Deposits $3000 Loans $2550 The required reserve ratio is 10% a. How much is the bank required to hold as reserves given its deposits of $3000? b. How much are its excess reserves? c. By how much can the bank increase its loans? d. Suppose a...
While Monetary Policy can have three "goals," it only has one "tool" to implement policy. That...
While Monetary Policy can have three "goals," it only has one "tool" to implement policy. That makes it particularly difficult for the central bank - the Bank of Canada - to manage any more that "one" goal. In Canada's case, the Bank of Canada's "goal" is to maintain an inflation-Target of 2 percent per year within an operating band of 1 to 3 percent. As a result, Canada maintains a FLEXIBLE or FLOATING current regime in international markets. i. Carefully...
If the Bank of Canada's target for the overnight rate is 1.75% while the actual overnight rate is 1.70%, the appropriate monetary policy for the Bank of Canada would be to buy government securities in the open market. True False
Questions: a) Select a monetary policy instrument and explain how to use the instrument to implement monetary policy to ease the effects of a severe recession. b) Use the concept of the cause chain effect to indicate (e.g. rise, fall and or stay the same) how each of the following will be effected with this policy. i) Excess reserves il) Money Supply iii) Interes rates iv) Investment v) Aggregate demand vi) Real GDP
How do the Bank of Canada's actions change the exchange rate? When the Bank of Canada lowers the overnight loans rate, the Canadian interest rate differential and other things remaining the same, the Canadian dollar O A falls; depreciates O B. fallis; appreciates OC rises, appreciates OD. rises depreciates
Suppose the Bank of Canada raises the overnight loans rate. Describe the ripple effects of this monetary policy. Other short-term interest rates and the exchange rate Consumption expenditure, investment, and net exports The quantity of money and supply of loanable funds Aggregate demand Real GDP growth and the inflation rate O A. rise; increase OB. fall; decrease O c. fall; increase OD. rise; decrease O A. decreases; decrease OB. increases; decrease or remain the same O c. decreases; increase or...
Describe the channels by which monetary policy ripples through the economy and explain how each channel operates. Suppose the Bank of Canada raises the overnight loans rate. When the Bank of Canada raises the overnight loans rate, it makes an open market Other short-term interest rates and the exchange rate rise. The quantity of money and the supply of loanable funds decrease The long-term real interest rate rises The higher real interest rate decreases consumption expenditure and investment. The exchange...
want to know the answer for both the
questions....thanksss ASAP
1. In The News: Bank of Canada increases overnight rate Canada increases overnight rate target to 14 per cent October 24, 2018- The Bank of Canada today increased its target for the to 1 34 per cent. The Bank Rate is correspondingly 2 per cent and y increased its target for the overnight rate 12 per cent is correspondingly 2 per cent and the deposit rate is 1 Questions: a)...
While Monetary Policy can have three "goals," it only has one "tool" to implement policy. That makes it particularly difficult for the central bank - the Bank of Canada - to manage any more that "one" goal. In Canada's case, the Bank of Canada's "goal" is to maintain an inflation-Target of 2 percent per year within an operating band of 1 to 3 percent. As a result, Canada maintains a FLEXIBLE or FLOATING current regime in international markets. i. Carefully...
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