When the Bank of Canada lowers interest rates, the international transmission mechanism reinforces the impact of the domestic transmission mechanism on the economy.

Question

Quizplus · Accepted Answer

When the Bank of Canada lowers interest rates, it makes Canadian assets less attractive to foreign investors, lowering the demand for Canadian dollars and causing the exchange rate to fall. This can boost exports and increase economic activity in Canada. Therefore, the international transmission mechanism reinforces the impact of the domestic transmission mechanism on the economy.

When the Bank of Canada Lowers Interest Rates, the International