Which of the following is not consistent with the effects of a decrease in the overnight rate target by the Bank of Canada on the economy?
A) Market interest rates decrease.
B) The Canadian dollar depreciates.
C) The growth of spending on domestic goods increases.
D) Aggregate demand and real GDP decrease.

Question

Quizplus · Accepted Answer

A decrease in the overnight rate target by the Bank of Canada typically leads to lower market interest rates, which can encourage borrowing and spending. This can lead to a depreciation of the Canadian dollar, making exports cheaper and imports more expensive, thus potentially increasing spending on domestic goods. The overall effect of these changes is usually an increase in aggregate demand and real GDP, not a decrease.

Which of the Following Is Not Consistent with the Effects