Because Prices Are Sticky in the Short-Run, When the Bank

question 3

Multiple Choice

Because prices are sticky in the short-run, when the Bank of Canada raises the overnight rate, ________.

• A) nominal interest rates fall
• B) real interest rates rise
• C) inflation falls
• D) real interest rates fall

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Definitions:

Judicial Power

The authority granted to courts and judges to interpret and apply the law, adjudicate conflicts, and enforce rulings.

Consumer Capitalism

An economic system driven by consumer spending on goods and services, often characterized by the encouragement of goods consumption.

Middle Eastern Countries

Nations located in the Middle East, a region primarily in Western Asia and Northeast Africa, characterized by distinct cultural, religious, and geopolitical traits.

Social Contract

A theory or model, originating during the Age of Enlightenment, that typically addresses the questions of the origin of society and the legitimacy of the authority of the state over the individual.