Which of the following would tend to decrease unemployment in the short run?
A)chartered banks calling in loans to build up their excess reserves
B)a chartered bank purchasing government securities from the Bank of Canada as an investment
C)the Bank of Canada increasing the bank rate
D)the Bank of Canada buying government securities from investment dealers

Question

Quizplus · Accepted Answer

When the Bank of Canada buys government securities from investment dealers, it injects money into the economy, increasing the level of bank reserves and lowering interest rates. This makes it easier and cheaper for banks to borrow money and lend it out, leading to an increase in investment, consumption, and aggregate demand. As a result, businesses are more likely to hire additional workers, leading to a decrease in unemployment in the short run.

Which of the Following Would Tend to Decrease Unemployment in the Short