If the Bank of Canada is concerned with inflation it will _______ the overnight loans rate to _______.

Question

Quizplus · Accepted Answer

If the Bank of Canada is concerned with inflation, it will raise the overnight loans rate. This is because raising the interest rate makes borrowing more expensive, which in turn reduces spending and investment. As a result, aggregate demand decreases, which helps to slow down the economy and reduce inflationary pressures.

If the Bank of Canada Is Concerned with Inflation It