Which of the following statements is false? A) Falling aggregate demand during the recent recession called for sizeable monetary stimulus from the Bank of Canada. B) When monetary base increases, the AD curve shifts to the left. C) A money supply target for monetary policy adjusts interest rates to keep nominal money stock on a specified path. D) There is no need for monetary stimulus from the Bank of Canada, when (Y - Y_P) is zero.

Question

Quizplus · Accepted Answer

When the monetary base increases, it typically leads to an increase in the money supply, assuming the money multiplier is greater than one. This increase in the money supply can lower interest rates, stimulate investment and consumption, and ultimately shift the aggregate demand (AD) curve to the right, not to the left as stated.

Which of the Following Statements Is False