Which of the following statements is false?
A) The Bank of Canada will conduct open market purchase of bonds to provide additional monetary base to support additional demand for money.
B) Open market sale of bonds by the Bank of Canada increases the monetary base in Canada.
C) Open market purchase of bonds by the Bank of Canada increases the money supply in Canada.
D) Open market sale of bonds by the Bank of Canada decreases the lending by other banks.

Question

Quizplus · Accepted Answer

Open market sale of bonds by the Bank of Canada actually decreases the monetary base in Canada, as it involves selling bonds to the public or banks in exchange for money, which reduces the amount of money in circulation.

Which of the Following Statements Is False