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The Diagrams Below Illustrate Two Alternative Approaches to Implementing Monetary

Question 45

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The diagrams below illustrate two alternative approaches to implementing monetary policy.The economy begins in monetary equilibrium with the interest rate equal to 2% and the money supply equal to The diagrams below illustrate two alternative approaches to implementing monetary policy.The economy begins in monetary equilibrium with the interest rate equal to 2% and the money supply equal to . FIGURE 28-1 Refer to Figure 28-1.If the Bank of Canada raises the target interest rate to 3%,as shown in part (i) ,then it must accommodate the resulting ________ in quantity of money demanded by ________ in financial markets. A) increase; selling government securities B) decrease; selling government securities C) increase; buying government securities D) decrease; buying government securities . The diagrams below illustrate two alternative approaches to implementing monetary policy.The economy begins in monetary equilibrium with the interest rate equal to 2% and the money supply equal to . FIGURE 28-1 Refer to Figure 28-1.If the Bank of Canada raises the target interest rate to 3%,as shown in part (i) ,then it must accommodate the resulting ________ in quantity of money demanded by ________ in financial markets. A) increase; selling government securities B) decrease; selling government securities C) increase; buying government securities D) decrease; buying government securities FIGURE 28-1 Refer to Figure 28-1.If the Bank of Canada raises the target interest rate to 3%,as shown in part (i) ,then it must accommodate the resulting ________ in quantity of money demanded by ________ in financial markets.


A) increase; selling government securities
B) decrease; selling government securities
C) increase; buying government securities
D) decrease; buying government securities

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