What should the Bank of Canada do if it wants to increase the money supply?
A) buy government securities
B) cut taxes
C) raise the discount rate
D) raise the reserve requirement

Question

Quizplus · Accepted Answer

Buying government securities injects new money into the economy and increases the money supply. Cutting taxes and raising the reserve requirement both have the opposite effect of reducing the money supply, while raising the discount rate is a tool used to control inflation rather than increase the money supply.

What Should the Bank of Canada Do If It Wants