When the Bank of Canada wants to slow down business activity and decrease the money supply, it
A) lowers the bank rate.
B) lowers the reserve requirement.
C) decreases government spending.
D) buys government securities.
E) raises the bank rate.

Question

Quizplus · Accepted Answer

When the Bank of Canada wants to slow down business activity and decrease the money supply, it usually raises the bank rate. This makes borrowing more expensive, which leads to businesses and consumers being less likely to take out loans and spend money. This decrease in spending lowers the overall money supply and slows down economic growth.

When the Bank of Canada Wants to Slow Down Business