An increase in the interest rate by the Bank of Canada based on a given monetary policy rule represents a ________ the aggregate demand (ADI)curve,but an increase in the interest rate resulting from an upward shift in the Bank of Canada's monetary policy rule represents a _________ the aggregate demand (ADI)curve.
A) shift to the left of;movement up
B) shift to the left of;shift to the right of
C) movement up;movement down
D) movement up;shift to the left of
E) movement down;shift to the left of

Question

Quizplus · Accepted Answer

An increase in the interest rate based on a given monetary policy rule causes a movement up along the ADI curve, while an increase due to an upward shift in the policy rule causes the ADI curve to shift to the left.

An Increase in the Interest Rate by the Bank of Canada