The front-page headline of your local newspaper states that the Bank of Canada is becoming increasingly worried about the rate of inflation and wants to slow the economy.Which of the following policies is the Bank of Canada most likely to pursue?

Question

Quizplus · Accepted Answer

To slow down an economy and combat inflation the Bank of Canada would restrict the money supply and drive up interest rates. This would make it more expensive for individuals and businesses to borrow money, reducing overall spending and slowing economic growth. The other options of increasing taxes, decreasing interest rates, and devaluing the dollar would all have the opposite effect and stimulate economic activity.

The Front-Page Headline of Your Local Newspaper States That the Bank