Which of the following describes what the Bank of Canada would do to pursue an expansionary monetary policy?

Question

Quizplus · Accepted Answer

To pursue an expansionary monetary policy, the Bank of Canada would use open market operations to buy government of Canada bonds. This increases the money supply in the economy and lowers the interest rates, which stimulates borrowing and spending.

Answer: B, C, D and E are not correct 
 These options are all tools that the Bank of Canada can use, but they are associated with contractionary monetary policy, which aims to slow down an overheating economy. Selling government of Canada bonds, raising the discount rate, raising reserve requirements, and raising capital buffers all decrease the money supply in the economy and increase borrowing costs, which discourages spending and helps to cool down inflation.

Which of the Following Describes What the Bank of Canada