If the Bank of Canada buys government bonds, all of the following happens except

Question

Quizplus · Accepted Answer

The purchase of government bonds by the Bank of Canada would result in an increase in bank reserves and an increase in the quantity of money, as well as an increase in the supply of loanable funds. However, it would not result in a rise in the bank rate, which is the interest rate at which commercial banks borrow from the central bank. Finally, the purchase of government bonds by the Bank of Canada would not directly affect net exports.

If the Bank of Canada Buys Government Bonds, All of the Following