To lower the short-term interest rate,the Bank of Canada can:

Question

Quizplus · Accepted Answer

When the Bank of Canada buys Treasury bills, it injects money into the financial system, which increases the supply of money and lowers the short-term interest rate. This is known as an expansionary monetary policy. Selling Treasury bills would have the opposite effect and raise the short-term interest rate. Telling the banks to make more or fewer loans would not directly affect the short-term interest rate but would impact the overall level of lending and economic activity.

To Lower the Short-Term Interest Rate,the Bank of Canada Can