If the Bank of Canada wants to slow down business activity, it can raise the bank rate. This will make banks less willing to make loans to businesses.

Question

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When the Bank of Canada raises the bank rate, it makes it more expensive for banks to borrow money from the central bank. As a result, banks may increase their interest rates on loans to businesses to maintain profitability, which can make it less attractive for businesses to borrow and therefore slow down business activity.

If the Bank of Canada Wants to Slow Down Business