Which of the following best describes the consequences of open market purchases conducted by the Bank of Canada?
A)Bank reserves increase and the money supply increases.
B)Bank reserves increase and the money supply decreases.
C)The Bank of Canada borrows from member banks, which increases the money supply.
D)The Bank of Canada lends money to member banks, which decreases the money supply.

Question

Quizplus · Accepted Answer

Open market purchases by the Bank of Canada inject money into the banking system, increasing the amount of reserves available to Canadian banks. This results in an increase in the money supply.

Which of the Following Best Describes the Consequences of Open