If the Bank of Canada wanted to stimulate business activity, it could ________, but if it wanted to slow down business activity it could ________.
A) sell government securities; raise the reserve requirement
B) raise the margin requirement; raise the reserve requirement
C) buy government securities; sell government securities
D) sell government securities; buy government securities
E) raise the bank rate; lower the bank rate

Question

Quizplus · Accepted Answer

Buying government securities injects more money into the economy and lowers interest rates, which can stimulate business activity. Selling government securities removes money from the economy and raises interest rates, which can slow down business activity.

If the Bank of Canada Wanted to Stimulate Business Activity