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In the IS-LM Model When the Bank of Canada Decreases

Question 37

Multiple Choice

In the IS-LM model when the Bank of Canada decreases the money supply, the public _____ bonds, and the interest rate _____, leading to a(n) _____ in investment and income. This is called the monetary transmission mechanism.


A) buy; rises; increase
B) sell; falls; decrease
C) sell; rises; decrease
D) buy; rises; decrease

Correct Answer:

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