If the Bank of Canada were issue Canada Savings bonds to the public,we would expect
A)the AD curve to remain unchanged since this has no effect on the money supply.
B)the AD curve to shift to the right since this has the effect of increasing the money supply.
C)the AD curve to shift to the left since this has the effect of decreasing the money supply.
D)will see a marked effect from the interest rate effect.

Question

Quizplus · Accepted Answer

When the Bank of Canada issues Canada Savings Bonds to the public, it is essentially borrowing money from the public. This will decrease the money supply as people will have less money to spend or invest. Therefore, the AD curve will shift to the left. The interest rate effect would also occur, but it's not relevant to this question.

If the Bank of Canada Were Issue Canada Savings Bonds