All other things being equal,a contractionary monetary policy in Canada will decrease Canadian interest rates and increase the demand for and decrease the supply of the Canadian dollar.

Question

Quizplus · Accepted Answer

A contractionary monetary policy in Canada would involve increasing interest rates in order to decrease spending and control inflation. This would make Canadian bonds and investments more attractive to investors and increase the demand for the Canadian dollar, resulting in an increase in its value (appreciation) and a decrease in the supply of Canadian dollars.

All Other Things Being Equal,a Contractionary Monetary Policy in Canada