Use the following to answer questions:
-Suppose that the Bank of Canada is conducting an expansionary monetary policy.It will _____ Treasury bills on the open market,so that the money supply will _____,interest rates will _____,planned investment spending will _____,and the AD curve will shift to the _____.

Question

Use the following to answer questions: 
-Suppose that the Bank of Canada is conducting an expansionary monetary policy.It will _____ Treasury bills on the open market,so that the money supply will _____,interest rates will _____,planned investment spending will _____,and the AD curve will shift to the _____.

Quizplus · Accepted Answer

An expansionary monetary policy involves increasing the money supply and decreasing interest rates, which stimulates economic activity. To achieve this, the Bank of Canada will purchase Treasury bills on the open market, which puts more money in circulation. This increases aggregate demand and shifts the AD curve to the right. Additionally, lowering interest rates makes borrowing cheaper, incentivizing firms and consumers to increase spending and investment. Choice C is the only answer choice that correctly reflects this sequence of events.

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