The main tool that the Bank of Canada uses to conduct monetary policy is

Question

Quizplus · Accepted Answer

Open market operations involve the buying and selling of government securities in the open market, which affects the supply of money and ultimately the level of interest rates. This is the most commonly used tool by central banks, including the Bank of Canada, to conduct monetary policy. Discount policy and reserve requirements are not frequently used by the Bank of Canada. Acting as the lender of last resort is a function of the Bank of Canada, but it is not directly related to monetary policy. Cheque clearing is a function of the banking system and not a tool of the Bank of Canada for conducting monetary policy.

The Main Tool That the Bank of Canada Uses to Conduct