2. Suppose banks install automated teller machines on every block and, by making cash readily available, reduce
Question:
2. Suppose banks install automated teller machines on every block and, by making cash readily available, reduce the amount of money people want to hold,
a. Assume the Bank of Canada does not change the money supply. According to the theory of liquidity preference, what happens to the interest rate? What happens to aggregate demand? Assume a closed economy.
b. If the Bank of Canada wants to stabilize aggregate demand, how should it respond?
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Related Book For 
Principles Of Macroeconomics
ISBN: 9780176591977
7th Canadian Edition
Authors: N. Mankiw, Ronald Kneebone, Kenneth McKenzie
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