By changing ______, the Bank of Canada can expand or shrink funds available to lend.

Question

Quizplus · Accepted Answer

By changing interest rates, the Bank of Canada can influence borrowing and lending behaviour in the market. Lowering interest rates would make borrowing cheaper and incentivize businesses and individuals to take out loans, which would expand funds available to lend. Raising interest rates would have the opposite effect and shrink funds available to lend. Changing taxes and spending would affect government revenues and expenditures but not necessarily impact funds available to lend. Fees charged on household and business checking and savings accounts would affect bank revenues but not necessarily impact funds available to lend.

By Changing ______, the Bank of Canada Can Expand or Shrink