Canadian Securities Course (CSC) Practice Exam · Question
What is the primary tool used by the Bank of Canada to implement monetary policy?
The Bank of Canada uses the target for the overnight rate to influence short-term interest rates and, consequently, economic activity and inflation.
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Question: What is the primary tool used by the Bank of Canada to implement monetary policy?
Answer options:
- Government spending
- Taxation rates ✅ The overnight rate target
- Issuing new currency
Correct answer: The overnight rate target
Explanation: The Bank of Canada uses the target for the overnight rate to influence short-term interest rates and, consequently, economic activity and inflation.
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