Multiple Choice
Suppose the economy is experiencing an inflationary gap.Which of the following describes a likely policy response by the Bank of Canada?
A) a contractionary monetary policy which leads to a lower interest rate,reduced investment demand,and a shift to the left of the AD curve
B) an expansionary monetary policy which leads to an increase in investment demand,and a shift to the right of the AD curve
C) an expansionary monetary policy which leads to a decrease in investment demand,and a shift to the left of the AD curve
D) a contractionary monetary policy which leads to an increase in investment demand,and a shift to the right of the AD curve
E) a contractionary monetary policy which leads to a reduction in investment demand,and a shift to the left of the AD curve
Correct Answer:
Verified
Correct Answer:
Verified
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