When the Bank of Canada makes an open market purchase, its assets ________ and its liabilities ________.
A)decrease; decrease
B)decrease; increase
C)increase; increase
D)increase; decrease
E)decrease; do not change

Question

Quizplus · Accepted Answer

When the Bank of Canada makes an open market purchase, it buys securities, which increases its assets, and it pays for these securities by creating reserves, which increases its liabilities.

When the Bank of Canada Makes an Open Market Purchase