If the economy is in a recessionary gap,the Bank of Canada should conduct _____ monetary policy by _____ the money supply.

Question

Quizplus · Accepted Answer

In a recessionary gap, there is a decrease in demand, leading to a decrease in output and employment. To combat this, the Bank of Canada should conduct expansionary monetary policy, which involves increasing the money supply. This can be done through measures such as decreasing interest rates or buying securities. The increase in the money supply will encourage spending and investment, leading to an increase in demand and output.

If the Economy Is in a Recessionary Gap,the Bank of Canada