When the Bank of Canada fights recession by lowering the overnight loans rate, the supply of reserves curve shifts ________ and the supply of money curve shifts ________.

Question

Quizplus · Accepted Answer

Lowering the overnight loans rate increases the supply of reserves, shifting the supply of reserves curve rightward. This also increases the money supply, shifting the supply of money curve rightward.

When the Bank of Canada Fights Recession by Lowering the Overnight