If We Observe That Short- Term Market Interest Rates Have

question 14

Multiple Choice

If we observe that short- term market interest rates have fallen, we can conclude that the

• A)Government of Canada has reduced the money supply.
• B)Bank of Canada has implemented an expansionary monetary policy.
• C)Bank of Canada has abandoned its inflation target.
• D)Bank of Canada has implemented a contractionary monetary policy.
• E)-- it is not possible to conclude any of the above.

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Definitions:

More Elastic

Describes demand that is highly sensitive to changes in price, where consumers significantly alter their quantity demanded with slight price variations.

Price-Discriminating Firm

A company that engages in the practice of charging different prices for the same product in different markets or segments.

Elastic Demand

Refers to a situation where the quantity demanded of a good or service significantly changes in response to a change in price.

Inelastic Demand

A situation where the demand for a good or service is not significantly changed by alterations in its price.