1.Suppose that the Bank of Canada increases the monetary base. Which of the following is likely to happen?

A)Interest rates to fall and the aggregate expenditure function to shift upward

B)Interest rates to rise and the aggregate expenditure function to shift downward

C)Interest rates to rise and the aggregate expenditure function to shift upward

D)Interest rates to fall and the aggregate expenditure function to shift downward

2.Suppose that an excess demand for money exists in the economy. As the money market moves toward an equilibrium interest rate, we can expect:

A)Bond prices to rise and the interest rate to rise

B)Bond prices to rise and the interest rate to fall

C)Bond prices to fall and the interest rate to fall

D)Bond prices to fall and the interest rate to rise

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3.Suppose money demand is less than money supply in the economy. As the money market moves toward an equilibrium interest rate:

A)We can expect bond prices to fall and the interest rate to fall

B)We can expect bond prices to rise and the interest rate to fall

C)We can expect bond prices to fall and the interest rate to rise

D)We can expect bond prices to rise and the interest rate to rise