If the Bank of Canada lowers the discount rate,ceteris paribus,the equilibrium levels of funds lent will __________ and the equilibrium level of real interest rates will ___________

Question

Quizplus · Accepted Answer

When the Bank of Canada lowers the discount rate, it becomes cheaper for banks to borrow money. This typically leads to an increase in the supply of funds available for lending, which increases the equilibrium levels of funds lent. As a result, the increased supply of funds tends to lower the equilibrium level of real interest rates.

If the Bank of Canada Lowers the Discount Rate,ceteris Paribus,the