One Reason the Bank of Canada Does Not Try to Influence

question 5

Multiple Choice

One reason the Bank of Canada does not try to influence the money supply directly is that

• A)the Bank of Canada has many other policy tools with which it can influence aggregate demand.
• B)the Bank of Canada does not have the mandate to change the money supply.
• C)because the money demand curve is almost horizontal,changes in the money supply would have little or no effect on the interest rate.
• D)because the investment demand curve is almost vertical,any change in the interest rate resulting from a change in money supply would have little or no effect on desired investment expenditure.
• E)the slope of the money demand curve is not precisely known,and so the effect on the interest rate of a change in money supply is uncertain.

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Definitions:

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A change that typically occurs during puberty, involving the lowering of vocal pitch, especially noted in males.