Suppose the Bank of Canada wishes to make only a small change in the money supply.Which of its policy tools is it most likely to use?

Question

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Open-market operations refer to the buying or selling of government securities in the financial market. By buying or selling government securities, the Bank of Canada can affect the amount of money in circulation in the economy. If the Bank of Canada wants to make only a small change in the money supply, it is most likely to use open-market operations as it allows for precise control over the money supply. The other policy tools, such as the prime interest rate, loans made to the public, and influence over the desired reserve ratio, may have a greater impact on the money supply than desired if the objective is to make only a small change.

Suppose the Bank of Canada Wishes to Make Only a Small