The Bank of Canada Reduces the Amount of Money Banks

question 144

Multiple Choice

The Bank of Canada reduces the amount of money banks can lend. As a result, interest rates will ______ and economic growth will ______.

• A) increase; increase
• B) fall; fall
• C) fall; increase
• D) increase; fall

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Definitions:

Marginal Analysis

An examination of the benefits and costs of an additional unit of change in economic decisions.

Marginal Benefit

The added gratification or usefulness that an individual acquires from the consumption of an additional unit of a good or service.

Marginal Benefit Curve

A graphical representation showing how the benefit to consumers changes with each additional unit consumed.

Total Benefit

The entire value or advantage received from consuming a good or service.