If the Bank of Canada sells bonds,what will be included in the short run impact of this policy?

Question

Quizplus · Accepted Answer

When the Bank of Canada sells bonds, it decreases the money supply in the economy, which leads to an increase in real interest rates. As a result, borrowing becomes more expensive, consumption and investment decrease, and aggregate demand falls. This can cause a short-run contraction in real output and potentially increase unemployment. However, this policy may also help to curb inflationary pressures in the economy.

If the Bank of Canada Sells Bonds,what Will Be Included