The Bank of Canada raised interest rates in 2018. By doing this, what did the Bank of Canada do to the money supply and why?

Question

Quizplus · Accepted Answer

When the Bank of Canada raises interest rates, it decreases the money supply. This is because raising interest rates makes borrowing more expensive, leading consumers and businesses to cut back on spending and borrowing. This reduces the amount of money circulating in the economy, which helps to control inflationary pressures. Therefore, the Bank of Canada likely raised interest rates in 2018 to address concerns about inflation.

The Bank of Canada Raised Interest Rates in 2018