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When the Bank of Canada Increases the Money Supply,why Will

Question 13

Multiple Choice

When the Bank of Canada increases the money supply,why will it cause an increase in aggregate demand?


A) because the dollar will appreciate on the foreign exchange market, leading to an increase in net exports
B) because interest rates will fall, stimulating business investment and consumer purchases
C) because consumers will expect prices to rise and will increase current consumption
D) because lower interest rates will tend to decrease asset prices, which increases wealth and thereby stimulates current consumption

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