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.