If the Bank of Canada's monetary policy rule changes from r = 0.04 +
To r = 0.02 + ,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 = 0.04 + 
To r = 0.02 + ,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 monetary policy rule from r = 0.04 + 11ec9ae1_5835_c323_a39a_894797bc4130_TB34225555_11 to r = 0.02 + 11ec9ae1_6558_5774_a39a_a52b98a722b4_TB34225555_11 represents a monetary easing since the interest rate target has been lowered. This will lead to a shift to the right of the aggregate demand (ADI) curve as lower interest rates make borrowing cheaper, stimulating consumption and investment spending, which in turn increases aggregate demand.

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