14. Assume that the Bank of Canada's policy is to stabilize the interest rate. If the economy begins to expand, the Bank of Canada:

A. would have to increase the money supply to keep the interest rate from falling

B. would have to decrease the money supply to keep the interest rate from rising

C. would have to increase the money supply to keep the interest rate from rising

D. can keep the interest rate stable without altering the money supply

E. will have to accept a lower interest rate if it does not alter the money supply

I don't understand why the answer is "C". When the economy expands, why do the interest rates rise? Doesn't interest rate go down when aggregate demand is increasing?

Thanks.