Suppose That the Bank of Canada Has Set a Target

question 289

Multiple Choice

Suppose that the Bank of Canada has set a target for the overnight rate.If initially the equilibrium interest rate happens to be higher than the target interest rate,then the Bank of Canada should _____ Treasury bills in the open market,_____ the money supply,shift the supply of money curve to the _____,and _____ the interest rate to the target rate.

• A) sell;decrease;left;raise
• B) purchase;decrease;left;lower
• C) purchase;increase;right;lower
• D) sell;increase;left;raise

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