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; does not change

Answer

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

Answer

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

Answer

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

Answer

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

Crowdly

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

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