When does the supply of money increase?
A)when the value of money increases
B)when the price level decreases
C)when the Bank of Canada makes open-market purchases
D)when the Bank of Canada increases the bank rate

Question

Quizplus · Accepted Answer

When the Bank of Canada makes open-market purchases, it injects money into the financial system, increasing the supply of money. This is often done as a measure to stimulate economic growth or to prevent deflation. Therefore, option C is correct. The other options are incorrect as they do not result in an increase in the supply of money.

When Does the Supply of Money Increase