Which of the following would constitute an expansionary monetary policy by the Bank of Canada?

Question

Quizplus · Accepted Answer

A reduction of the Bank's target for the overnight interest rate would lead to lower borrowing costs, which would stimulate borrowing and spending by households and businesses, thereby increasing the money supply and promoting economic growth. A and B are contractionary monetary policies, as they would reduce the amount of funds available for lending and borrowing. C is also contractionary, as it involves selling securities to commercial banks, which would reduce their reserves and limit their ability to lend. Therefore, the correct answer is D.

Which of the Following Would Constitute an Expansionary Monetary Policy