Refer to the market for money diagram below.Other things being equal, if the Bank of Canada increases the stock of money, the:

Question

Quizplus · Accepted Answer

When the Bank of Canada increases the stock of money, it is increasing the supply of money in the market. This will cause the S curve to shift rightward, as there is now more money available at each interest rate. As a result, the equilibrium interest rate will fall, as borrowers will be willing to borrow more at the lower interest rates and lenders will be willing to lend less at the same interest rates. Therefore, choice B is correct.

Refer to the Market for Money Diagram Below