The Bank of Canada decreased interest rates in 2008 and again in 2009. 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 decreases interest rates, it makes borrowing cheaper and more attractive, which in turn leads to increased spending and investment. This increase in spending and investment creates more jobs and lowers unemployment. However, it also increases the money supply because more money is being borrowed and spent, which can lead to inflation if left unchecked. Nonetheless, in times of recession, like in 2008-2009, the Bank of Canada typically prioritizes reducing unemployment over concerns about inflation.

The Bank of Canada Decreased Interest Rates in 2008 and Again