Multiple Choice
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 from 2% to 3%,it is pursuing a(n) ________ monetary policy and the quantity of money demanded will ________.
A) contractionary; rise
B) contractionary; fall
C) expansionary; not change
D) expansionary; rise
E) expansionary; fall
Correct Answer:
Verified
Correct Answer:
Verified
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