"The Bank of Canada can perfectly control the amount of the monetary base, but has less control over the composition of the monetary base." Is this statement true, false, or uncertain? Explain your answer. 

A. True. Because the Bank of Canada can alter the monetary base through its open market operations, it effectively gives the Bank of Canada perfect control of the monetary base. 

B. False. Since the Bank of Canada cannot control the amount of discount lending to financial institutions, it does not have perfect control over the amount of reserves in the banking system and hence the monetary base. 

C. True. By controlling the discount rate, the Bank of Canada is able to accurately predict banks' borrowings from the Bank of Canada, which allows the Bank to control the amount of reserves in the banking system and hence the monet base.

Answer rating: 100% (QA)

Option A is correct Central bank helps to frame a nations monetary policy and it also helps to contr... View the full answer