When the Bank of Canada Reduces the Interest Rate We

question 116

Multiple Choice

When the Bank of Canada reduces the interest rate we call this an expansionary monetary policy.Why?

• A)The lower interest rate leads to an increase in the level of national saving.
• B)The lower interest rate causes an expansion of money demand.
• C)The lower interest rate leads to a rightward shift of the aggregate demand curve.
• D)The lower interest rate causes the money demand curve to shift to the right.
• E)The lower interest rate causes the money supply curve to shift to the left.

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Definitions:

Periodic Payment

Regular payments made over a period, such as monthly mortgage or insurance payments.

Ordinary Annuity

Uniform compensation packages delivered upon concluding every phase over a defined schedule.

Periodic Payment

A recurring payment made over a set interval of time, such as monthly or annually, often associated with loans or investments.

Ordinary Annuity

Like payments executed after every period close throughout an agreed length.