Based on the Bank of Canada's monetary policy rule,when inflation rises,the Bank of Canada ________ interest rates,hence _________ short-run equilibrium output.
A) increases;increasing
B) increases;decreasing
C) does not change;increasing
D) decreases;increasing
E) decreases;decreasing

Question

Quizplus · Accepted Answer

When inflation rises, the Bank of Canada typically increases interest rates to reduce spending and borrowing, which in turn decreases short-run equilibrium output.

Based on the Bank of Canada's Monetary Policy Rule,when Inflation