To increase the money supply, the Bank of Canada could

Question

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By entering into a purchase and resale agreement, the Bank of Canada can inject reserves into the banking system, increasing the ability of banks to create loans and thus increasing the money supply. This is known as open market operations. Raising the bank rate (A) and raising the desired reserve ratio (C) both have the opposite effect, reducing the ability of banks to create loans and thus decreasing the money supply. Decreasing income taxes (B) and lowering transfer payments (E) do not directly affect the money supply.

To Increase the Money Supply, the Bank of Canada Could