If the Bank of Canada conducts open market ________, the money supply ________, shifting the MP curve to the right, everything else held constant.
A) purchases; decreases
B) sales; decreases
C) purchases; increases
D) sales; increases

Question

Quizplus · Accepted Answer

Open market purchases by the Bank of Canada increase the money supply, which shifts the MP curve to the right. Thus, the correct choice is C.

If the Bank of Canada Conducts Open Market ________, the Money