Consider the Bank of Canada's sale of Canadian government securities in its open market operations.What type of policy is this?

Question

Quizplus · Accepted Answer

The Bank of Canada's sale of Canadian government securities in its open market operations is a contractionary policy because it reduces the amount of total reserves in the banking system. When the Bank of Canada sells securities, it takes money out of the economy and reduces the reserves held by banks. As a result, banks have less money to lend, which can lead to higher interest rates and less borrowing and spending.

Consider the Bank of Canada's Sale of Canadian Government Securities