The Bank of Canada could target both the money supply and the interest rate at the same time if it controlled money demand along with money supply.

Question

Quizplus · Accepted Answer

If the Bank of Canada was able to control money demand through various tools such as open market operations, it could effectively target both the money supply and interest rates simultaneously. By increasing or decreasing the money supply, the Bank of Canada could also influence the demand for money and in turn affect interest rates. Therefore, it is possible for the Bank of Canada to target both variables if it is able to control money demand as well as supply.

The Bank of Canada Could Target Both the Money Supply