If the Bank of Canada wants to target a rate of growth of the money supply faster than what currently exists,it must

Question

Quizplus · Accepted Answer

To achieve a faster rate of growth of the money supply, the Bank of Canada must create and inject more money into the economy. This can be done by lowering interest rates, which encourages borrowing and spending, leading to an increase in the money supply. By accepting a lower interest rate, the Bank of Canada can stimulate the economy and push for faster money supply growth. Option A is incorrect as higher interest rates would discourage borrowing and spending, leading to slower money supply growth. Option C is incorrect as lower bond prices would mean higher interest rates which again would reduce money supply growth. Option D is incorrect as price deflation would reduce the money supply, which is the opposite of what is desired.

If the Bank of Canada Wants to Target a Rate