The most important day-to-day monetary instrument that the Bank of Canada uses to achieve the desired interest rate and therefore the price stability is:
A)open-market operations.
B)the bank rate.
C)the government expenditure.
D)the prime interest rate.

Question

Quizplus · Accepted Answer

The most important day-to-day monetary instrument used by the Bank of Canada to achieve its desired interest rate and price stability is open-market operations. This involves the buying and selling of securities in the open market, which affects the supply of money and the cost of borrowing. It is a powerful tool that allows the Bank of Canada to control the levels of inflation and the money supply. The Bank of Canada adjusts the supply of money in the economy, which impacts the interest rate, economic growth, and, ultimately, the price of goods and services.

The Most Important Day-To-Day Monetary Instrument That the Bank of Canada