What Effect Would a Combination of an Open Market Sale

question 59

Multiple Choice

What effect would a combination of an open market sale by the Bank of Canada and an increase in the bank rate have on the money supply?

• A)It would increase the money supply.
• B)It would decrease the money supply.
• C)It would have an indeterminate effect on the money supply.
• D)It would leave the money supply unchanged.

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Definitions:

Mercantilist Theory

An economic theory that emphasizes government regulation of international trade to generate wealth and strengthen national power, advocating for a positive balance of trade.

Mother Country

A term referring to the country of origin for settlers or colonizers of a territory, or more broadly, to a country considered as the origin in a colonial or ancestral relationship.

Raw Materials

Basic, unprocessed resources used in the production of goods and services, such as minerals, forest products, and agricultural items.

Indentured Servitude

A labor system where people paid for their passage to the New World by working for an employer for a fixed term of years.