114) Suppose the actual overnight interest rate is 3.5%. If the Bank of Canada r

Question

114) Suppose the actual overnight interest rate is 3.5%. If the Bank of Canada raises its target for the overnight interest rate to 4%, and longer-term interest rates in the market rise as a result, A) the demand for loans from commercial banks rises, the commercial banks sell government securities to the B) the demand for loans from commercial banks falls, the commercial banks buy government securities from C) the demand for loans from commercial banks falls, the commercial banks sell government securities to the D) the demand for loans from commercial banks rises the commercial banks buy government securities from F) the demand for loans from commercial banks rises, the commercial banks buy government securities from Bank of Canada, and the money supply rises. the Bank of Canada, and the money supply falls. Bank of Canada, and the money supply falls. the Bank of Canada, and the money supply rises. heRank Canada and the money suppy fall

Explanation / Answer

Answer 114: B

The demand for loans from commercial banks falls, the commercial banks buy government securities from the Bank of Canada, and the money supply falls

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Answer: A

CPI inflation; 2

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