Fill in the blanks to make the following statements correct. a. The interest rate that commercial banks charge each other for overnight loans is called the overnight interest rate. b. The bank rate is 0.25 basis points above the target overnight interest rate. At this interest rate, the Bank stands ready to accept deposits from commercial banks. At a rate 0.25 basis points below the target, the Bank stands ready to lend any amount to commercial banks (and pay that rate of interest). (Round your responses to the nearest basis point.) c. The Bank of Canada can change the amount of currency in circulation through open-market operations. The Bank conducts these transactions to accommodate the changing demand for cash reserves by the commercial banks. d. An expansionary monetary policy is one where the Bank of Canada its target for the overnight interest rate. e. If the Bank of Canada wants to dampen aggregate demand, it can implement rate. monetary policy by its target for the overnight interest
Fill in the blanks to make the following statements correct. a. The interest rate that commercial banks charge each other for overnight loans is called the overnight interest rate. b. The bank rate is 0.25 basis points above the target overnight interest rate. At this interest rate, the Bank stands ready to accept deposits from commercial banks. At a rate 0.25 basis points below the target, the Bank stands ready to lend any amount to commercial banks (and pay that rate of interest). (Round your responses to the nearest basis point.) c. The Bank of Canada can change the amount of currency in circulation through open-market operations. The Bank conducts these transactions to accommodate the changing demand for cash reserves by the commercial banks. d. An expansionary monetary policy is one where the Bank of Canada its target for the overnight interest rate. e. If the Bank of Canada wants to dampen aggregate demand, it can implement rate. monetary policy by its target for the overnight interest
Chapter12: Money And The Banking System
Section: Chapter Questions
Problem 4DQ
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Transcribed Image Text:Fill in the blanks to make the following statements correct.
a. The interest rate that commercial banks charge each other for overnight loans is called the overnight interest rate.
b. The bank rate is 0.25 basis points above the target overnight interest rate. At this interest rate, the Bank stands ready to accept deposits from commercial banks.
At a rate 0.25 basis points below the target, the Bank stands ready to lend any amount to commercial banks (and pay that rate of interest). (Round your
responses to the nearest basis point.)
c. The Bank of Canada can change the amount of currency in circulation through open-market operations. The Bank conducts these transactions to accommodate
the changing demand for cash reserves by the commercial banks.
d. An expansionary monetary policy is one where the Bank of Canada
its target for the overnight interest rate.
e. If the Bank of Canada wants to dampen aggregate demand, it can implement
rate.
monetary policy by
its target for the overnight interest
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