If the Bank of Canada lowers the overnight loans rate, which of the following events occur?
In the money market, the short-term interest rate ________ while in the Treasury bond market, the Treasury bill rate ________.

Question

If the Bank of Canada lowers the overnight loans rate, which of the following events occur? 
 In the money market, the short-term interest rate ________ while in the Treasury bond market, the Treasury bill rate ________.

Answer

falls to keep close to the overnight rate; rises as the price of a bond falls

Answer

falls and the quantity of money increases; rises as the price of a bond falls

Answer

falls to keep close to the overnight rate; does not change

Answer

falls and the quantity of money increases; falls to keep close to the overnight rate

Answer

does not change; falls to keep close to the overnight rate

Crowdly

If the Bank of Canada lowers the overnight loans rate, which of the following ev...

Want instant access to all verified answers on moodle.uleth.ca?