If the Bank of Canada chooses to expand M2 by exactly $1 million, it could do so by
A) buying $1 million worth of government securities on the open market.
B) increasing reserves at the commercial banks by $1 million.
C) selling $1 million worth of government securities on the open market.
D) decreasing reserves at the commercial banks by $1 million.
E) none of the above - the Bank of Canada cannot precisely control the money supply.
Correct Answer:
Verified
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