All else equal, when the Bank of Canada engages in an expansionary monetary policy, the interest rate received on government securities tends to:
A)fall.
B)rise.
C)remain constant.
D)move in the same direction as the bonds' price.

Question

Quizplus · Accepted Answer

When the Bank of Canada engages in an expansionary monetary policy, it increases the money supply in the economy, which leads to increased demand for government securities. As a result, the prices of these securities rise, causing their yield (interest rate) to fall.

All Else Equal, When the Bank of Canada Engages in an Expansionary