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Describe how each of the given developments would influence the supply of money, the demand for money and the interest rate. For each case, illustrate what happens in a closed economy and in a small open economy. Describe your answers with diagrams.

The Bank of Canada's bond traders purchase bonds in the open-market operations.

A) The raise in credit card availability decreases the cash people hold.

B) Households decide to hold more money to utilize for holiday shopping.

C) The wave of optimism boots business investment and expands the aggregate demand.

D) The rise in oil prices shifts the short-run aggregate supply curve to the left.

Macroeconomics, Economics

  • Category:- Macroeconomics
  • Reference No.:- M910175

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