Question

Basic functions of the Bank of Canada include 1) acting as lender of last resort to private non-financial corporations; 2) acting as banker for the chartered banks. 3) regulating the money supply.

A) 1 only
B) 2 only
C) 3 only
D) 2 and 3
E) 1, 2, and 3

Answer 1

The Bank of Canada's functions include acting as the banker for chartered banks and regulating the money supply. It does not serve as a lender of last resort to private non-financial corporations. The correct answer is D) 2 and 3.

Step-by-step explanation:

The question pertains to the basic functions of the Bank of Canada, which are similar to the functions of most central banks, including the Federal Reserve. The correct functions of the Bank of Canada include acting as the banker for chartered banks and regulating the money supply. However, it does not act as a lender of last resort to private non-financial corporations but to financial institutions. Therefore, the correct answer to the question is to choose option D) 2 and 3: acting as banker for the chartered banks and regulating the money supply.

• The Bank of Canada serves as the banker to Canada's chartered banks.
• It plays a crucial role in regulating the money supply to ensure economic stability.
• Central banks globally, like the Bank of Canada, are tasked with maintaining the stability of the financial system and controlling the money supply, not serving non-financial corporations directly.