An increase in interest rates by the Bank of Canada with the intention of reducing an expansionary gap is called
A) expansionary monetary policy.
B) contractionary monetary policy.
C) monetary easing.
D) negative monetary policy.
E) autonomous monetary policy.

Question

Quizplus · Accepted Answer

An increase in interest rates by the Bank of Canada is a contractionary monetary policy. This is because it restricts borrowing and spending, which helps to reduce inflation and close an expansionary gap.

An Increase in Interest Rates by the Bank of Canada