What does a monetary injection by the Bank of Canada do to interest rates and aggregate demand?
A)It increases interest rates and increases aggregate demand.
B)It increases interest rates and decreases aggregate demand.
C)It decreases interest rates and decreases aggregate demand.
D)It decreases interest rates and increases aggregate demand.

Question

Quizplus · Accepted Answer

A monetary injection by the Bank of Canada involves increasing the money supply, which leads to a decrease in interest rates as banks have more funds to lend. This lowers borrowing costs and encourages spending, which in turn increases aggregate demand. Therefore, the correct choice is D: It decreases interest rates and increases aggregate demand.

What Does a Monetary Injection by the Bank of Canada