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Homework answers / question archive / What action should the Bank of Canada take if inflation is persistently below 2% and is decreasing? O sell securities O lower the target for the overnight lending rate increase the chartered banks reserve ratio increase the bank rate
What action should the Bank of Canada take if inflation is persistently below 2% and is decreasing? O sell securities O lower the target for the overnight lending rate increase the chartered banks reserve ratio increase the bank rate
If inflation is persistently below 2% and is decreasing then central bank has to increase money supply in the economy as too low inflation is also bad fir the economy .
So increasimg money supply means central bank has to adopt expansionary monetary policy.
Selling securities, increasing bank rate and increasing CRR are measures used to decrease money supply that is to adopt contractionary monetary policy
option B that is lower the target for the overnight lending rate is correct answer
