Which of the following is a sterilization operation that supports the Canadian dollar?
A) The Bank of Canada sells U.S. dollars and buys government bonds.
B) The Bank of Canada buys U.S. dollars and sells government bonds.
C) The Bank of Canada sells both U.S. dollars and government bonds.
D) The Bank of Canada buys both U.S. dollars and government bonds.

Question

Quizplus · Accepted Answer

The Bank of Canada sells U.S. dollars and buys government bonds to support the Canadian dollar. This operation reduces the supply of Canadian dollars in the market, which increases its value relative to the U.S. dollar.

Which of the Following Is a Sterilization Operation That Supports