What is the appropriate open market operation for reducing the money supply?

Question

Quizplus · Accepted Answer

Selling Canadian government securities is the appropriate open market operation for reducing the money supply. When the central bank sells government securities, it reduces the amount of reserves held by banks, which in turn reduces the amount of money they are able to lend out. By decreasing the amount of money in circulation, the central bank can effectively reduce the money supply.

What Is the Appropriate Open Market Operation for Reducing the Money