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Suppose the Bank of Canada made an announcement that it would purchase up to $500 billion...

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Economics

  1. Suppose the Bank of Canada made an announcement that it wouldpurchase up to $500 billion of long term Canada bonds over thefollowing six month. What effect might this policy has on the yieldcurve? Explain in detail.

  1. During the current economic crisis caused by the Coronavirus,what would you expect the yiedd curve to look like? Upward sloping,flat, or inverted.Explain in detail.

Answer & Explanation Solved by verified expert
3.8 Ratings (443 Votes)
aPurchasing long term Canada bonds over following six month will actually increase the demand of the long term bonds Keeping the supply same if the demand increases then the price of the traded bond will increase An increase in the price of bond will push the yeild down in the longer end of the curve This    See Answer
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