If the Bank of Canada were to unexpectedly decrease the money supply, creditors would gain at the expense of debtors.

Question

Quizplus · Accepted Answer

If the Bank of Canada were to decrease the money supply, there would be less money available in the economy, which would cause interest rates to rise. This would benefit creditors who would receive higher interest payments on loans they have given out. However, debtors would suffer as they would have to pay more interest on loans they have taken out. So, overall, creditors would gain at the expense of debtors.

If the Bank of Canada Were to Unexpectedly Decrease the Money