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:

Enabling Institutions

Institutions designed to support and facilitate the development and growth of individuals, businesses, or communities.

Spend Money

The action of using monetary resources to purchase goods or services.

Life Expectancy

The average period that a person may expect to live, which can be influenced by various factors including genetic, environmental, and lifestyle choices.

Religious Involvement

Participation or engagement in activities, beliefs, or practices related to a particular faith or religion.