Because Prices Are Slow to Move in the Short-Run, When

question 1

Multiple Choice

Because prices are slow to move in the short-run, when the Bank of Canada lowers the overnight rate, ________.

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

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Definitions:

Not-for-Profit Organization

An entity that operates for purposes other than generating profit, often focusing on social, educational, or charitable activities.

Private Property

The legal designation of the possession of property by non-governmental legal entities or individuals.

Private Enterprise System

An economic system where private individuals or groups have the right to own property and businesses and operate them for profit with minimal government interference.

Federal Taxes

Levies imposed by the government on income, corporate profits, and added to the cost of some goods, services, and transactions.