How could the Bank of Canada increase the money supply?

Question

Quizplus · Accepted Answer

When the Bank of Canada lends reserves to banks, it increases the banks' ability to lend and create deposits, thus increasing the overall money supply. Selling a bond to a chartered bank (option A) would not necessarily increase the money supply, as the bank would be using its reserves to purchase the bond. Selling a bond to a securities dealer (option B) would likely not have a significant impact on the money supply, as securities dealers primarily trade existing securities rather than creating new money. Increasing the bank rate (option D) would actually decrease the money supply, as it would make borrowing more expensive and decrease the incentive for banks to lend.

How Could the Bank of Canada Increase the Money Supply