What do the Bank of Canada's policy decisions have an important influence on?
A) both the rate of inflation and the level of employment in the short run
B) the rate of inflation in the long run and the level of employment in the short run
C) the rate of inflation in the short run and the level of employment in the long run
D) both the rate of inflation and the level of employment in both the short run and the long run

Question

Quizplus · Accepted Answer

The Bank of Canada's policy decisions significantly influence the rate of inflation in the long run through its monetary policy actions, aiming to maintain price stability. In the short run, these decisions can also affect the level of employment due to changes in interest rates impacting economic activity. However, in the long run, employment levels are more influenced by factors such as technological advancements and labor market policies, rather than central bank policies.

What Do the Bank of Canada's Policy Decisions Have an Important