Which of the following is the Bank of Canada implementing when it tightens the money supply by selling government securities or raising interest rates?
A) fiscal reduction strategy
B) contractionary policy
C) retrenchment strategy
D) shrinkage policy

Question

Quizplus · Accepted Answer

Tightening the money supply by selling government securities or raising interest rates is a contractionary policy. This policy is implemented by the central bank to reduce inflation and slow down economic growth. It reduces the amount of money in circulation and increases the cost of borrowing, encouraging individuals and businesses to spend less.

Which of the Following Is the Bank of Canada Implementing