If,in a bid to get re-elected,politicians decide to decrease taxes when there is an inflationary gap,what action might the Bank of Canada decide to take?
A)increase the money supply
B)sell government securities to the chartered banks
C)buy government securities from the general public
D)reduce the bank rate

Question

Quizplus · Accepted Answer

The Bank of Canada might sell government securities to the chartered banks to decrease the money supply, counteracting the inflationary pressure caused by the tax decrease.

If,in a Bid to Get Re-Elected,politicians Decide to Decrease Taxes