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Alena Grigore Alena Grigore
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3 years ago
When the inflation rate is 4 percent, the Bank of Canada will

A)sell bonds to raise interest rates and shift the aggregate demand curve leftward.

B)buy bonds to lower interest rates and shift the aggregate demand curve rightward.

C)do nothing, since an interest rate of 4 percent is desirable.

D)sell bonds to lower interest rates and accelerate the economy.

E)buy bonds to raise interest rates and slow down the economy.
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#1
Educator
3 years ago
inflation rate is high, thus bank will sell bond to reduce the inflation by raising the interest rate. Fall in the inflation rate would also cause the appreciation of currency in the market. Fall in the inflation is right for appreciation of currency.

Sell bonds, appreciate the dollor.
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