When the Bank of Canada reduces the money supply, at a given price level the amount of output demanded is _____, and the aggregate demand curve shifts _____.
A)greater; inward
B)greater; outward
C)lower; inward
D)lower; outward

Question

Quizplus · Accepted Answer

When the Bank of Canada reduces the money supply, interest rates typically rise, leading to decreased investment and consumption, which lowers the amount of output demanded. This causes the aggregate demand curve to shift inward.

When the Bank of Canada Reduces the Money Supply, at a Given