Which of the following does not occur as a result of the Bank of Canada lowering the overnight loans rate?
A)The supply of loanable funds increases.
B)The long-term real interest rate falls.
C)Exports increase.
D)The inflation rate decreases.
E)Imports decrease.

Question

Quizplus · Accepted Answer

Lowering the overnight loans rate by the Bank of Canada can lead to an increase in the supply of loanable funds available to banks, which could potentially result in lower long-term real interest rates (choice B). Additionally, a lower overnight rate may lead to a depreciation of the Canadian dollar, which could increase the demand for Canadian exports (choice C) and decrease the demand for imports (choice E). However, lowering the overnight rate is typically associated with an increase in inflation, not a decrease (choice D). Therefore, D is the answer that does not occur as a result of the Bank of Canada lowering the overnight loans rate.

Which of the Following Does Not Occur as a Result