Which of the following best describes the impact of open-market purchases by the Bank of Canada?
A)The money supply and the value of money increase.
B)The money supply increases, which makes the value of money decrease.
C)The money supply and the value of money decrease.
D)The money supply decreases, which makes the value of money increase.

Question

Quizplus · Accepted Answer

Open-market purchases involve the Bank of Canada buying government securities from the public, which increases the money supply. This increase in the money supply leads to a decrease in the value of money as there is now more money in circulation, leading to inflationary pressures.

Which of the Following Best Describes the Impact of Open-Market