To decrease the money supply

Question

Quizplus · Accepted Answer

The sale of government securities by the Bank of Canada decreases the amount of money available to the public, thus reducing the money supply. Option B, decreasing reserve requirements, would actually increase the money supply by allowing banks to lend out more money with the same amount of reserves. Option C, increasing loans, would also increase the money supply. Option D, selling government securities by commercial banks, would have some effect but not as significant as if the Bank of Canada were to do it.

To Decrease the Money Supply