How does the Bank of Canada conduct open-market transactions?
A) It prints new currency.
B) It buys or sells government bonds from or to the public.
C) It lowers the bank rate.
D) It increases its lending to chartered banks.

Question

Quizplus · Accepted Answer

The Bank of Canada conducts open-market transactions by buying or selling government bonds from or to the public. This is done with the aim of influencing the money supply, interest rates, and ultimately inflation. The Bank of Canada can buy government bonds from the public to increase the money supply and lower interest rates, or it can sell government bonds to the public to decrease the money supply and raise interest rates.

How Does the Bank of Canada Conduct Open-Market Transactions