Figure 14-1
-In Figure 14-1,suppose the economy is at a short run equilibrium at point D.Which of the following is the best policy option for the Bank of Canada?

Question

Figure 14-1 
-In Figure 14-1,suppose the economy is at a short run equilibrium at point D.Which of the following is the best policy option for the Bank of Canada?

Quizplus · Accepted Answer

An open market purchase of bonds by the Bank of Canada would increase the money supply, lower interest rates, and stimulate economic activity, which is typically desired when the economy is at a short-run equilibrium below full employment.

Figure 14-1 -In Figure 14-1,suppose the Economy Is at a Short Run