In the IS-LM Model When the Bank of Canada Decreases

question 37

Multiple Choice

In the IS-LM model when the Bank of Canada decreases the money supply, the public _____ bonds, and the interest rate _____, leading to a(n) _____ in investment and income. This is called the monetary transmission mechanism.

• A)buy; rises; increase
• B)sell; falls; decrease
• C)sell; rises; decrease
• D)buy; rises; decrease

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