To increase the nominal money supply, the Bank of Canada can engage in

Question

Quizplus · Accepted Answer

Open market purchases involve the Bank of Canada buying government securities from the public, thereby increasing their bank reserves and creating new money in the economy, which increases the nominal money supply. Seigniorage is the profit earned by the central bank when it creates money, and is not a method of increasing the money supply. Neither reducing inflation nor increasing taxes directly increases the nominal money supply. Open market sales involve the Bank of Canada selling government securities to the public, which reduces the money supply.

To Increase the Nominal Money Supply, the Bank of Canada