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For each of the following cases use the supply and demand analysis for bonds to the show the effect on interest rates. [Must draw diagrams
For each of the following cases use the supply and demand analysis for bonds to the show the effect on interest rates. [Must draw diagrams and give explanation to support your answers]
a. Bank of Canada increases the money supply by purchasing bonds from the public.
b. Inflation is expected to rise from 1% to 3% c. Economy starts moving towards a strong contraction in the business cycle
d. Sudden increase in people's expectation of future real estate prices
e. Expectation of interest rates to go up
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