Which Statement Best Describes the Effects of an Open-Market Operation

question 20

Multiple Choice

Which statement best describes the effects of an open-market operation undertaken by the Bank of Canada?

• A) If the Bank of Canada purchases bonds in the open market, then the money supply shifts right and the price level increases.
• B) If the Bank of Canada sells bonds in the open market, then the money supply shifts right and the price level decreases.
• C) If the Bank of Canada purchases bonds in the open market, then the money supply shifts left and the price level decreases.
• D) If the Bank of Canada sells bonds in the open market, then the money supply shifts left and the price level increases.

---

Definitions:

Jane Elliott

Jane Elliott is an American schoolteacher known for her "blue eyes–brown eyes" exercise, which she developed to illustrate the effects of racism and prejudice to her students following the assassination of Martin Luther King Jr.

Conforms

To behave according to the conventional standards, rules, or laws set by a group or society.

Normative Social Influence

It is the influence of other people that leads us to conform in order to be liked and accepted by them.

Compliance

The act of conforming, submitting, or adapting one's actions to another's wishes, rules, or regulations.