An upward shift of the Bank of Canada's monetary policy rule function corresponds to a _________ the aggregate demand (ADI)curve,and an increase in autonomous aggregate demand corresponds to a _________ the aggregate demand (ADI)curve.
A) shift to the left of;movement up
B) shift to the left of;shift to the right of
C) movement up;movement down
D) movement up;shift to the right of
E) shift to the right of;shift to the left of

Question

Quizplus · Accepted Answer

An upward shift of the monetary policy rule function typically leads to higher interest rates, reducing aggregate demand and shifting the ADI curve to the left. An increase in autonomous aggregate demand directly increases demand, shifting the ADI curve to the right.

An Upward Shift of the Bank of Canada's Monetary Policy