An increase in the interest rate by the Bank of Canada is an example of _______ policy.

Question

Quizplus · Accepted Answer

Monetary policy refers to the actions taken by a country's central bank, in Canada's case the Bank of Canada, to control the supply and cost of money. One of the key tools of monetary policy is to adjust interest rates, with an increase in interest rates being an example of a contractionary monetary policy. The purpose of this type of policy is to slow down economic growth and control inflation.

An Increase in the Interest Rate by the Bank of Canada