If the Bank of Canada Keeps the Real Interest Rate

question 80

Multiple Choice

If the Bank of Canada keeps the real interest rate constant,the recovery of a weak housing market would cause the ________,and the output gap would ________.

• A) MP curve to shift up; become less negative
• B) MP curve to shift down; become more negative
• C) IS curve to shift to the left; become more negative
• D) IS curve to shift to the right; become less negative

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Definitions:

Subsequent Events

Events occurring after the balance sheet date but before the financial statements are issued, which could materially affect the financial statements if not accounted for.

Fire or Flood Loss

Refers to the financial impact on a business or individual's assets due to damage caused by fire or floods, often covered by insurance.

Litigation Settlement

The resolution of a legal dispute before the court issues a final verdict, often involving payment to the aggrieved party.

Related-Party Transactions

Transactions occurring between parties where one is able to exert significant influence over the operations of the other, such as between a parent company and its subsidiary.