Explain How Each of the Following Actions Changes the Money

question 191

Essay

Explain how each of the following actions changes the money supply.
a. The Bank of Canada buys bonds.
b. The Bank of Canada raises the bank rate.
c. The Bank of Canada raises the reserve requirement.

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Definitions:

Returns to Scale

The rate at which output increases as inputs are increased proportionally, indicating how efficiently larger production scales affect production volume.

Diseconomies of Scale

The phenomenon where production costs per unit increase as a firm or operation grows in scale, opposite of economies of scale.

Returns to Scale

The change in output resulting from a proportionate increase in all inputs; the concept explains how output changes with varying levels of input.

Economies of Scale

Cost advantages that enterprises obtain due to their scale of operation, typically resulting in lower per-unit costs with increased production.