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Suppose the Bank of Canada Is Targeting the Interest Rate

Question 79

Multiple Choice

Suppose the Bank of Canada is targeting the interest rate when the demand for money increases.What is the proper monetary response in terms of the money supply?  


A)  decrease the money supply 
B)  keep the money supply constant 
C)  increase the money supply 
D)  stimulate inflation to increase the demand for money

Correct Answer:

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