Suppose the Government Wants to Eliminate a Recessionary Gap

question 60

Multiple Choice

Suppose the government wants to eliminate a recessionary gap.Which of the following strategies should the Bank of Canada implement?  

• A) The Bank of Canada should increase the money supply and increase the interest rate. 
• B) The Bank of Canada should increase the money supply and decrease the interest rate. 
• C) The Bank of Canada should decrease the money supply and increase the interest rate. 
• D) The Bank of Canada should decrease the money supply and decrease the interest rate.

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