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October 28th, 2020, the Bank of Canada announced that the overnight interest rate would remain unchanged at 0.25 percent. The central bank first decreased its
October 28th, 2020, the Bank of Canada announced that the overnight interest rate would remain unchanged at 0.25 percent. The central bank first decreased its overnight rate to 0.25 on March 27th, 2020. The decrease in interest rates is an example of an expansionary monetary policy. Assume a closed economy.
In three steps, describe the channels, the monetary transmission mechanism, through which changes in monetary policy leads to a shift of the aggregate demand curve.
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