If during a certain period the Bank of Canada's policy target was to stabilize the money supply, we would expect:
A)less inflation than if the Bank of Canada's policy was to stabilize interest rates.
B)tax revenues to fall.
C)interest rates to be quite volatile.
D)interest rates to be unusually stable.

Question

Quizplus · Accepted Answer

Stabilizing the money supply can lead to volatile interest rates because the demand for money can fluctuate due to various factors, causing interest rates to adjust to maintain the fixed money supply.

If During a Certain Period the Bank of Canada's Policy