If the Bank of Canada were to shift its policy reaction function rightward (i.e. ,an easing of monetary policy),the
A) IA line would shift upward,causing an increase in the inflation rate.
B) LRAS line would shift upward,causing an increase in the inflation rate.
C) IA line would shift downward,causing a decrease in the inflation rate.
D) ADI curve would shift to the left.
E) ADI curve would shift to the right.

Question

Quizplus · Accepted Answer

An easing of monetary policy by the Bank of Canada would typically lead to a rightward shift in the Aggregate Demand (ADI) curve, as lower interest rates encourage more spending and investment.

If the Bank of Canada Were to Shift Its Policy