THE ECONOMICS OF MONEY,BANKING, AND FINANCIAL MARKETS 435

CHAPTER 15
8. The Bank of Canada is the most independent of all
Canadian government agencies. What is the main
difference between it and other government agencies that explains its greater independence?
*9. How can the government directly influence the
Bank of Canada?
10. How is the responsibility for monetary policy
shared in the Eurosystem?
*11. The theory of bureaucratic behaviour indicates that
the Bank of Canada never operates in the public
interest. Is this statement true, false, or uncertain?
Explain your answer.

Central Banks and the Bank of Canada

403

12. Why might eliminating the Bank s independence
lead to a more-pronounced political business cycle?
*13. The independence of the Bank of Canada leaves it
completely unaccountable for its actions. Is this
statement true, false, or uncertain? Explain your
answer.
14. The independence of the Bank of Canada has meant
that it takes the long view and not the short view. Is
this statement true, false, or uncertain? Explain your
answer.
*15. Why did Canada show little interest in the establishment of a central bank during the first 60 or so years
of Confederation?

WEB EXERCISES

1. Go to www.bankofcanada.ca and click on About
the Bank. Choose Management and Corporate
Governance. Write a short essay about the diversity of
the twelve outside directors of the Bank of Canada s
Board of Directors.

3. Go to the above site and click on Monetary Policy.
Then click on Reports and then choose Beige
Book. According to the summary of the most
recently published book, is the U.S. economy weakening or recovering?

2. Go to www.federalreserve.gov and click on
About The Fed. Then click on The Federal
Reserve System and then on Structure. According
to the Federal Reserve, what is the most important
responsibility of the Board of Governors?

Be sure to visit the MyEconLab website at www.myeconlab.com.This online
homework and tutorial system puts you in control of your own learning with
study and practice tools directly correlated to this chapter content.
On the MyEconLab website you will find the following appendix for this chapter:
Appendix 15.1:The Price Stability Goal and the Nominal Factor