In times of financial and economic crisis, as in 2008 and 2009, we saw all of the following except:
A) open market purchases of bonds by the Bank of Canada.
B) "quantitative easing," using open market purchases of bonds to increase monetary base.
C) fixed interest rate.
D) increase monetary base through appropriate policies to offset liquidity-shortages.

Question

Quizplus · Accepted Answer

During financial crises, central banks like the Bank of Canada typically engage in actions such as open market purchases of bonds and quantitative easing to increase the monetary base and offset liquidity shortages. However, fixing interest rates is not a common practice in these situations; instead, interest rates may be adjusted as part of monetary policy responses to the crisis.

In Times of Financial and Economic Crisis, as in 2008