According to the liquidity preference model,if the Bank of Canada increases the money supply,the equilibrium interest rate _____,and this leads to a(n)_____ in the quantity of non-monetary interest-bearing financial assets demanded.

Question

Quizplus · Accepted Answer

When the Bank of Canada increases the money supply, the equilibrium interest rate falls, leading to an increase in the quantity of non-monetary interest-bearing financial assets demanded, as people shift from holding money to holding these assets due to lower interest rates.

According to the Liquidity Preference Model,if the Bank of Canada