An open market purchase of government securities by the Bank of Canada causes the reserves of banks to rise.

Name: An open market purchase of government securities by the Bank of Canada causes the reserves of banks to rise.
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Question

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When the Bank of Canada purchases government securities in open market operations, it injects new money into the banking system, increasing the reserves of banks. This can lead to an increase in lending activity and stimulate economic growth.

An Open Market Purchase of Government Securities by the Bank