One reason the Bank of Canada does not try to influence the money supply directly is that
A) the Bank of Canada has many other policy tools with which it can influence aggregate demand.
B) the Bank of Canada does not have the mandate to change the money supply.
C) because the money demand curve is almost horizontal,changes in the money supply would have little or no effect on the interest rate.
D) because the investment demand curve is almost vertical,any change in the interest rate resulting from a change in money supply would have little or no effect on desired investment expenditure.
E) the slope of the money demand curve is not precisely known,and so the effect on the interest rate of a change in money supply is uncertain.
Correct Answer:
Verified
Q5: The diagrams below illustrate two alternative approaches
Q6: In practice,the Bank of Canada implements its
Q7: In practice,the Bank of Canada uses monetary
Q8: The diagrams below illustrate two alternative approaches
Q9: The diagrams below illustrate two alternative approaches
Q11: Consider the implementation of monetary policy.One difficulty
Q12: The diagrams below illustrate two alternative approaches
Q13: Suppose the Bank of Canada wants to
Q14: Any central bank,including the Bank of Canada,can
Q15: Suppose the Bank of Canada chooses to
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents