The aggregate demand (ADI)curve shifts to the left if,for any given inflation rate,the Bank of Canada ________ interest rates more than normal,making monetary policy _________.
A) raises;"easier"
B) raises;"tighter"
C) raises;faster
D) lowers;"easier"
E) lowers;"tighter"

Question

Quizplus · Accepted Answer

When the Bank of Canada raises interest rates more than normal, it makes borrowing more expensive, which reduces consumer and business spending. This results in a decrease in aggregate demand, causing the ADI curve to shift leftward. This type of monetary policy is referred to as a "tightening" policy, which reduces the money supply and increases interest rates.

The Aggregate Demand (ADI)curve Shifts to the Left If,for Any