If the Bank of Canada pursues an expansionary monetary policy, investment in Canada will ________, and net exports will ________.

Question

Quizplus · Accepted Answer

An expansionary monetary policy typically lowers interest rates, making borrowing cheaper. This encourages investment by businesses and consumers. Lower interest rates can also lead to a depreciation of the national currency, making exports cheaper and imports more expensive, thus increasing net exports.

If the Bank of Canada Pursues an Expansionary Monetary Policy