If the economy is at potential output and the Bank of Canada increases the money supply,in the short run the likely result will be a(n)_____ in investment and a(n)_____ in consumption.

Question

Quizplus · Accepted Answer

In the short run, an increase in the money supply typically leads to lower interest rates, which encourages more investment and consumption, resulting in an increase in both.

If the Economy Is at Potential Output and the Bank