Which statement best describes the process of open-market sales conducted by the Bank of Canada?
A) The Bank of Canada sells Treasury bills, which increases the money supply.
B) The Bank of Canada sells Treasury bills, which decreases the money supply.
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 sales involve the selling of securities such as Treasury bills to the public. When the Bank of Canada conducts open-market sales, it decreases the money supply as it is taking money out of circulation. Therefore, choice B is the best description of the process of open-market sales conducted by the Bank of Canada.

Which Statement Best Describes the Process of Open-Market Sales Conducted