Answer to Question #64063 in Economics for Genie

Question

What action may the Bank of Canada undertake when Ford Canada makes a dividend payment to its parent corporation? Be specific

Answer 1

When Ford Canada makes a dividend payment to its parent corporation, then this amount of money is taken out from the Canada economy, so the money supply will decrease, and the Bank of Canada may undertake some policy to increase money supply by decreasing its funds rate or making open market purchase.