Which of the following does not occur as a result of the Bank of Canada raising the overnight loans rate?
A)the supply of loanable funds decrease
B)the long-term real interest rate rises
C)exports decrease
D)aggregate demand increases
E)imports increase

Question

Quizplus · Accepted Answer

When the Bank of Canada raises the overnight loans rate, it typically leads to a decrease in aggregate demand due to higher borrowing costs and reduced spending. As a result, choice D, which states that aggregate demand increases, is not a likely outcome. The other choices could all occur as a result of raising the overnight loans rate: a decrease in the supply of loanable funds (A), a rise in long-term real interest rates (B), and changes in exports (C) and imports (E) due to changes in relative interest rates and currency values.

Which of the Following Does Not Occur as a Result