In the Short Run,if the Bank of Canada Decreases Interest

question 86

Multiple Choice

In the short run,if the Bank of Canada decreases interest rates,then consumption and investment ______,planned aggregate expenditure ______,and short-run equilibrium output _______.

• A) increase;increases;increases
• B) increase;increases;decreases
• C) increase;decreases;decreases
• D) decrease;decreases;increases
• E) decrease;decreases;decreases

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Definitions:

Materially Participate

The level of involvement by a taxpayer in the operations of a business that is sufficient enough to qualify for tax deductions related to active participation.

At-risk Amount

The amount of money in a particular investment that can be claimed as a deduction in the event of a loss.

Passive Activities

Economic activities in which the investor does not materially participate, and which often have different tax implications, such as rental property income.

Suspended Losses

Suspended Losses are losses from passive activities that exceed passive income, which cannot currently be deducted but can be carried forward to offset future passive income.