The behaviour of the real interest rate since 2008 suggests the Bank of Canada
A) decreased the growth rate of the money supply.
B) was primarily concerned with rising inflation.
C) increased the growth rate of the money supply.
D) was politically motivated in its actions.
E) kept the growth rate of the money supply roughly constant.

Question

Quizplus · Accepted Answer

The behaviour of the real interest rate since 2008 has been consistently low, indicating that the Bank of Canada has increased the growth rate of the money supply. This is consistent with their efforts to stimulate the economy and avoid a recession following the global financial crisis. A decrease in the growth rate of the money supply would have led to higher interest rates, which is not what has been observed.

The Behaviour of the Real Interest Rate Since 2008 Suggests