If the Bank of Canada Buys Bonds, What Are the Effects

question 45

Multiple Choice

If the Bank of Canada buys bonds, what are the effects on money supply, interest rates, and the quantity of money demanded?  

• A) The money supply increases, the interest rate falls, and the quantity of money demanded increases. 
• B) The money supply falls, the interest rate falls, and the quantity of money demanded increases. 
• C) The money supply increases, the interest rate increases, and the quantity of money demanded increases. 
• D) The money supply falls, the interest rate increases, and the quantity of money demanded falls.

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Definitions:

HIV

Human Immunodeficiency Virus, a virus that attacks the immune system, leading to AIDS if not treated.

AIDS

Acquired Immunodeficiency Syndrome, a life-threatening condition caused by the human immunodeficiency virus (HIV) which severely damages the immune system.

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A condition characterized by the narrowing of the coronary arteries, leading to decreased blood flow to the heart muscle.

Blood Vessels

Tubular structures carrying blood through the tissues and organs; a vital component of the circulatory system.