If the Bank of Canada wants to lower the interest rate,it should:
A)raise the target overnight rate
B)try to recall currency from circulation
C)buy bonds in the open market
D)sell bonds in the open market
E)try to encourage banks to reduce their lending

Question

Quizplus · Accepted Answer

When the Bank of Canada buys bonds in the open market, it increases the money supply in the economy. This increase in money supply leads to lower interest rates because there is more money available for banks to lend.

If the Bank of Canada Wants to Lower the Interest