An Increase in the Interest Rate by the Bank of Canada

question 194

Multiple Choice

An increase in the interest rate by the Bank of Canada based on a given monetary policy rule represents a ________ the aggregate demand (ADI) curve,but an increase in the interest rate resulting from an upward shift in the Bank of Canada's monetary policy rule represents a _________ the aggregate demand (ADI) curve.

• A) shift to the left of;movement up
• B) shift to the left of;shift to the right of
• C) movement up;movement down
• D) movement up;shift to the left of
• E) movement down;shift to the left of

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Definitions:

Buyer Responsiveness

The degree to which consumers adjust their demand for a product or service in response to changes in price or other factors.

Demand Curve

A graph showing the relationship between the price of a good and the quantity of the good that consumers are willing and able to purchase at various prices.

Inelastic

Pertains to a scenario where the need for a product or service shows little reaction to fluctuations in its price.

Per Unit Price

The cost associated with a single unit of a product, illustrating the price at which one unit of the product can be purchased.