When the Bank of Canada sells bonds the

Name: When the Bank of Canada sells bonds the
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Question

Quizplus · Accepted Answer

When the Bank of Canada sells bonds, it increases the supply of bonds in the market. An increase in the supply of any good or commodity leads to a decrease in its price. Therefore, the increased supply of bonds lowers bond prices. As the bond prices decrease, the interest rates on the bonds increase as there is an inverse relationship between bond prices and interest rates. Hence, the correct answer is B.

When the Bank of Canada Sells Bonds the