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Explanation & Answer
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Running head: MACROECONOMIC QUESTIONS
Macroeconomic Questions
Name
Institution
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MACROECONOMIC QUESTIONS
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Macroeconomic Questions
1. Explain the two ways that the Bank of Canada could conduct Monetary Policy?
Which way did they choose and why?
The role of the Bank of Canada in conducting monetary policy is to ensure that there is
price stability in the country with a low rate of inflation and to have price stability of various
goods and services in the country. The Bank of Canada is tasked with the responsibility of
undertaking monetary actions. The two ways, which the Bank of Canada could initiate to
conduct monetary policy, include manipulating the money supply and setting the target for the
overnight interest rate.
Controlling money supply by the government entails selling of the government bonds and
treasury bills in the Open Market Operations (OMO). To incre...