When the Bank of Canada Uses Open Market Operations to Raise

question 216

Multiple Choice

When the Bank of Canada uses open market operations to raise the overnight rate, the

• A) demand for money increases.
• B) demand for money decreases.
• C) supply of money increases.
• D) supply of money decreases.
• E) supply of bonds decreases.

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Definitions:

Liability

A company's legal financial debts or obligations that arise during the course of business operations.

Dividends

Regular payments made by a corporation to its shareholders out of its profits or reserves.

Shareholders

Persons or organizations that possess stock in a corporation, thus holding a stake in the business.

Double Entry System

A method of bookkeeping where every entry to an account requires a corresponding and opposite entry to a different account, effectively balancing the accounting equation.