Which list ranks the Bank of Canada's monetary policy tools from most to least frequently used?
A) bank rate changes; open-market transactions; reserve requirement changes
B) bank rate changes; reserve requirement changes; open-market transactions
C) open-market transactions; bank rate changes; reserve requirement changes
D) open-market transactions; reserve requirement changes; bank rate changes

Question

Quizplus · Accepted Answer

Open-market transactions are the most frequently used tool as they allow the Bank of Canada to adjust the money supply quickly and easily. Bank rate changes are the second most frequently used tool as they signal the general direction of interest rates and can help guide inflation expectations. Reserve requirement changes are the least frequently used tool as they can have a significant impact on the financial system and are only used in exceptional circumstances.

Which List Ranks the Bank of Canada's Monetary Policy Tools