Which of the following does not occur as a result of the Bank of Canada raising the overnight loans rate?
A)The supply of loanable funds decreases.
B)The long-term real interest rate rises.
C)Exports decrease.
D)Aggregate demand increases.
E)Imports increase.

Question

Quizplus · Accepted Answer

When the Bank of Canada raises the overnight loans rate, it reduces the availability of loanable funds and increases the cost of borrowing money. This leads to a decrease in aggregate demand, as individuals and businesses are less able to afford loans and investments. However, exports and imports are typically influenced by other factors, such as exchange rates and global economic conditions, and may not be directly affected by changes in the overnight loans rate. While the higher interest rates may increase the long-term real interest rate, this is a possible result of the Bank's actions, but not a guaranteed outcome.

Which of the Following Does Not Occur as a Result