Think of a Time When the Economy Was Very Strong

question 48

Multiple Choice

Think of a time when the economy was very strong for several years and business was booming. During that time, however, prices began to increase and there was fear that the increase might continue for an extended period. Which of the following actions could the Bank of Canada have taken to counteract the increasing prices?

• A) raise the overnight rate
• B) lower the reserve requirement
• C) buy government bonds
• D) increase the overall supply of money