1 and 2:

If the Bank of Canada were to unexpectedly decrease the money supply, creditors would gain at the expense of debtors. a. True b. False 1. What is the immediate and longer-term effect of a decrease in the money supply? A decrease in the money supply creates an excess supply of money that is eliminated by falling prices. A decrease in the money supply creates an excess demand for money that is eliminated by rising prices. A decrease in the money supply creates an excess demand for money that is eliminated by falling prices. A decrease in the money supply creates an excess supply of money that is eliminated by rising prices