Canadian Securities Course (CSC) Practice Exam · Question
When the Bank of Canada wants to stimulate economic growth, which action is it most likely to take regarding the overnight rate?
To stimulate economic growth, the Bank of Canada typically lowers the overnight rate target, making it cheaper for banks to borrow and lend, which encourages ec
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Question: When the Bank of Canada wants to stimulate economic growth, which action is it most likely to take regarding the overnight rate?
Answer options: ✅ Decrease the overnight rate target
- Increase the overnight rate target
- Maintain the overnight rate target
- Increase the capital reserve requirements for banks
Correct answer: Decrease the overnight rate target
Explanation: To stimulate economic growth, the Bank of Canada typically lowers the overnight rate target, making it cheaper for banks to borrow and lend, which encourages economic activity.
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