When the Bank of Canada Reduces the Interest Rate We

Multiple Choice

When the Bank of Canada reduces the interest rate we call this an expansionary monetary policy.Why?

A) The lower interest rate leads to an increase in the level of national saving.
B) The lower interest rate causes an expansion of money demand.
C) The lower interest rate leads to a rightward shift of the aggregate demand curve.
D) The lower interest rate causes the money demand curve to shift to the right.
E) The lower interest rate causes the money supply curve to shift to the left.