In an inflationary gap, the Bank of Canada raises interest rates to decrease aggregate demand.

Name: In an inflationary gap, the Bank of Canada raises interest rates to decrease aggregate demand.
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When there is an inflationary gap, meaning the economy is producing above its potential and there is upward pressure on prices, the Bank of Canada may raise interest rates to reduce aggregate demand and inflationary pressures.

In an Inflationary Gap, the Bank of Canada Raises Interest