When the Bank of Canada makes an open-market sale, it:
A)increases the money multiplier (m).
B)increases the currency-deposit ratio (cr).
C)increases the monetary base (B).
D)decreases the monetary base (B).

Question

Quizplus · Accepted Answer

An open-market sale by the Bank of Canada decreases the monetary base (B) because it involves selling government securities, which reduces the reserves in the banking system.

When the Bank of Canada Makes an Open-Market Sale, It