If the Bank of Canada's monetary policy rule changes from r = 0.02 +
To r = 0.04 + ,this is an example of monetary __________ and will lead to a _________ the aggregate demand (ADI)curve.
A) "tightening";shift to the right of
B) "tightening";shift to the left of
C) "tightening";upward movement along
D) "easing";shift to the right of
E) "easing";shift to the left of

Question

If the Bank of Canada's monetary policy rule changes from r = 0.02 + 
To r = 0.04 + ,this is an example of monetary __________ and will lead to a _________ the aggregate demand (ADI)curve.
A) "tightening";shift to the right of 
B) "tightening";shift to the left of 
C) "tightening";upward movement along 
D) "easing";shift to the right of 
E) "easing";shift to the left of

Quizplus · Accepted Answer

The change in the monetary policy rule from r = 0.02 + 11ec9ae0_f4e1_72b1_a39a_c30de1cf2a3e_TB34225555_11 to r = 0.04 + 11ec9ae1_029c_0142_a39a_31edaa2877f2_TB34225555_11 represents a "tightening" of monetary policy since interest rates are being increased. This will lead to a leftward shift of the aggregate demand (ADI) curve since higher interest rates will decrease consumer and investment spending, reducing aggregate demand.

If the Bank of Canada's Monetary Policy Rule Changes from R