The Bank of Canada may use ____ when it wants to increase interest rates in the...

The Bank of Canada may use ____ when it wants to increase interest rates in the overnight funds market.

Redeposits
Drawdowns
T-bill purchases
Purchase and resell agreements

Expert Solution

Bank of canada uses the special purchase and resell agreements to inject short term liquidity into the market especially in the overnight lending operations. Long term liquidity injection is carried out through purchase and resale agreement (PRA)

Answer is D. Purchase and Resell agreements

jeff jeffy answered 2 years ago

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