2. Determine how each of the following events will affect the interest rate and the movement of either demand or supply curves on the diagram above, and provide a short explanation. (3 Marks)

a. The economy is recovering from a recession; people tend to save less and consume more. 2 Marks

b. A recession cause consumers to buy fewer house, cars, and other major appliances 2 Marks

c. Due to an economic downturn, the Bank of Canada adopts an easy money policy. 2 Marks