1) Suppose that after five solid years of economic growth, Eurekaland begins to experience inflationary pressures due to strong consumer and investor confidence. If Eurekaland's Central Bank wants to prevent inflation from becoming a major problem, which of the following actions should it take?

a) It should reduce the money supply to push interest rates higher.

b) It should increase the money supply to push interest rates higher.

c) It should reduce the money supply to push interest rates lower.

d) It should increase the money supply to push interest rates lower.

2) If the Bank of Canadachooses to sell bonds on the open market, it is attempting to:

a) lower interest rates using expansionary monetary policy.

b) lower interest rates using contractionary monetary policy.

c) raise interest rates using expansionary monetary policy.

d) raise interest rates using contractionary monetary policy.