When the Bank of Canada wants to change the money supply, which of the following does it most frequently do?

Question

Quizplus · Accepted Answer

The Bank of Canada most frequently conducts open market operations to change the money supply. This involves buying or selling government securities in the market, which affects the amount of money in circulation in the economy. Changing the bank rate or reserve requirement are also tools the Bank of Canada can use, but they are not as frequently used as open market operations. The bank rate is the interest rate that the central bank charges commercial banks for borrowing money, and the reserve requirement is the amount of money that commercial banks are required to hold in reserve. Changing transfers such as unemployment benefits, child allowances, or other social assistance payments is a fiscal policy tool and would be implemented by the government, not the central bank.

When the Bank of Canada Wants to Change the Money