Figure 10.5 -Refer to Figure 10.5.A Shift from MP₁ to MP₃ Will

Multiple Choice

Figure 10.5

-Refer to Figure 10.5.A shift from MP₁ to MP₃ will occur if

A) investors increase the short-term interest they expect in the future.
B) investors increase the term premium they require on long-term bonds.
C) the Bank of Canada decreases its target for the short-term nominal interest rate.
D) the expected inflation rate decreases.