What Is the Appropriate Open Market Operation for Reducing the Money

question 40

Multiple Choice

What is the appropriate open market operation for reducing the money supply?  

• A) buy Canadian government securities 
• B) limit the amount loaned to banks 
• C) increase desired reserves 
• D) sell Canadian government securities

---

Definitions:

Discount

A reduction on the usual cost of a product or service, typically to stimulate its purchase.

Deadweight Loss

Deadweight loss is a loss of economic efficiency that can occur when the equilibrium for a good or a service is not achieved or is not achievable.

Marginal Cost

The increase or decrease in the total cost incurred by producing one additional unit of a product or service.

Socially Efficient

A situation in which resources are allocated in a way that maximizes the welfare of society as a whole.