An upward shift in the Bank of Canada's monetary policy rule is a monetary _________,and the aggregate demand (ADI)curve ___________.
A) "tightening";shifts right
B) "tightening";shifts left
C) "tightening";does not shift
D) "easing";shifts right
E) "easing";shifts left

Question

Quizplus · Accepted Answer

An upward shift in the Bank of Canada's monetary policy rule indicates a "tightening" of monetary policy, which means that the central bank is reducing the money supply and increasing interest rates to control inflation. This would cause a decrease in aggregate demand, shifting the ADI curve to the left.

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