Answer to Question #104445 in Macroeconomics for Reyderlyn Evangelista

Question

Describe the two key tools of monetary policy, and describe how they would be used by the Bank of Canada to implement a contractionary monetary policy

Answer 1

- The Bank of Canada may increase the Central Bank's discount rate in order to increase the cost of loans for business and the public.

- The Bank of Canada may sell government securities, this will lead to a reduction in the money supply in the country.