Suppose the Bank of Canada strictly followed a rule of keeping money supply at $900 billion.This level of money is consistent with the economy's initial general equilibrium.
a.Assume that GDP has increased.How will the interest rate change?
b.Assume that banks have introduced chequing accounts that pay interest.How will the interest rate change?
c.What are the effects of the Bank's money targeting policy on the economy?

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The Answer of Suppose the Bank of Canada strictly followed a rule of keeping money supply at $900 billion.This level of money is consistent with the economy's initial general equilibrium.
a.Assume that GDP has increased.How will the interest rate change?
b.Assume that banks have introduced chequing accounts that pay interest.How will the interest rate change?
c.What are the effects of the Bank's money targeting policy on the economy?

Suppose the Bank of Canada Strictly Followed a Rule of Keeping