Suppose you are the governor of the Bank of Canada. The economy is experiencing a sharp...

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Economics

Suppose you are the governor of the Bank of Canada. The economyis experiencing a sharp rise in the inflation rate. What changeswould you consider in:
a) Open-market operations
b) The bank rate
c) Explain in each case how the change you advocate would affectchartered bank cash reserves and influence the money supply?Elaborate your ideas with hypothetical examples related to anyCanadian charted bank? Â Â
d) Distinguish between the overnight lending rate and the primeinterest rate. Why is one higher than the other? Why do changes inthe two rates closely track each other? Can we categorize thecurrent monetary policy as an Expansionary Monetary Policy? Why orwhynot?Â Â Â Â Â Â Â Â Â Â Â Â Â Â

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Introduction Governments across the globe face numerous issues of economic instability and have therefore decided upon monetary sovereignty which allows for setting up of central bank or the bankers bank Across the globe these banks allow for easing of critical market situations that are part of the global economy In this case we will highlight the functioning of critical aspects of a central bank the specifics are as follows Case Specifics Answer to Part A B C 1 Open Market Operations In the situation of an inflated economy in which there is a sudden impact on the availability of cash in the hands of the public the Central bank would sell government bonds in See Answer

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