Who determines the amount of money in the economy?
A) The Bank of Canada controls the money supply precisely.
B) The amount of money in the economy does not depend on the behaviour of depositors.
C) The amount of money in the economy depends in part on the behaviour of banks.
D) The Minister of Finance determines the amount of money in the economy by law.

Question

Quizplus · Accepted Answer

The amount of money in the economy depends on the behaviour of banks, specifically their lending practices. The Bank of Canada can influence the money supply through its monetary policy, but it does not have precise control. The behaviour of depositors can also affect the money supply, but to a lesser extent than banks. The Minister of Finance does not determine the amount of money in the economy by law.

Who Determines the Amount of Money in the Economy