The Diagrams Below Illustrate Two Alternative Approaches to Implementing Monetary

question 66

Multiple Choice

The diagrams below illustrate two alternative approaches to implementing monetary policy.The economy begins in monetary equilibrium with the interest rate equal to 2% and the money supply equal to . FIGURE 28-1 Refer to Figure 28-1.If the Bank of Canada raises the target interest rate from 2% to 3%,it is pursuing a(n) ________ monetary policy and the quantity of money demanded will ________.

• A)contractionary; rise
• B)contractionary; fall
• C)expansionary; not change
• D)expansionary; rise
• E)expansionary; fall

---

Definitions:

Implicit Memory

Refers to memories that are recalled without conscious effort, such as procedural memories for tasks.

Ku Klux Klan

A white supremacist hate group in the United States, known for racist terrorism, including lynching and intimidation against African Americans and other minority groups.

Unregulated Capitalism

An economic system without governmental oversight and control, where the free market dictates prices, production, and distribution of goods and services.

Cosmopolitan Character

The quality of being familiar with and at ease in many different countries and cultures, often associated with an openness to new ideas and diversity.