When the Bank of Canada lowers the overnight rate to fight recession, which of the following events occur?
The supply of loanable funds

Question

When the Bank of Canada lowers the overnight rate to fight recession, which of the following events occur? 
 The supply of loanable funds

Answer

increases, but the real interest rate rises, which decreases aggregate demand.

Answer

decreases, which decreases aggregate demand.

Answer

increases, but aggregate demand does not change.

Answer

increases, which increases aggregate demand.

Answer

decreases, which increases aggregate demand.

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