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(Solved): An important way in which the Bank of Canada decreases the money supply is by selling bonds to the p ...



An important way in which the Bank of Canada decreases the money supply is by selling bonds to the public. a. Use demand and supply analysis to explain why an expectation of interest rate hikes would cause Government bond prices to fall. (3 points) b. If we relax the assumption "Everything else equal", what are the four effects of an increase in money supply on the interest rate? (4 points)



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