By controlling the ________,the Bank of Canada is able to influence ________.
A) overnight rate; market interest rates
B) interbank rate; market interest rates
C) exchange rate; overnight rate
D) exchange rate; market interest rates

Question

Quizplus · Accepted Answer

The Bank of Canada controls the overnight rate, which is the interest rate that commercial banks lend to each other. By setting the overnight rate, the Bank of Canada is able to influence the market interest rates, which are the rates that individuals and businesses pay on loans and mortgages. Therefore, choice A is the best choice. The other choices are not accurate as the interbank rate and exchange rate do not have a direct relationship with market interest rates.

By Controlling the ________,The Bank of Canada Is Able to Influence