When the Bank of Canada lowers the overnight loans rate, there is a _______ shift of the _______ curve.

Question

Quizplus · Accepted Answer

When the Bank of Canada lowers the overnight loans rate, it becomes cheaper for banks to borrow money from the central bank. This encourages increased lending by banks to consumers and businesses, resulting in increased consumer spending and business investment. This leads to a rightward shift of the aggregate demand (AD) curve as there is an increase in demand for goods and services.

When the Bank of Canada Lowers the Overnight Loans Rate