When the Bank of Canada wants to stimulate business activity and increase the money supply, it
A) buys government securities.
B) raises the reserve requirement.
C) decreases government spending.
D) raises the bank rate.
E) sells government securities.

Question

Quizplus · Accepted Answer

When the Bank of Canada wants to stimulate business activity and increase the money supply, it can buy government securities from banks. This increases the amount of money banks have, making it easier for them to lend money to businesses and individuals. This stimulates the economy by increasing spending and investment.

When the Bank of Canada Wants to Stimulate Business Activity