Figure 10.5 -Refer to Figure 10.5..A Shift from MP₁ to MP₂ Will

Multiple Choice

Figure 10.5

-Refer to Figure 10.5..A shift from MP₁ to MP₂ will occur if

A) the Bank of Canada decreases its target for the short-term nominal interest rate.
B) the term structure effect increases.
C) the default-risk premium decreases.
D) the expected inflation rate increases.