Suppose that an increase in world oil prices leads to greater aggregate demand for Canadian exports of oil. If the Bank of Canada reduces the overnight interest rate in response to this increase in AD, this is called

Question

Quizplus · Accepted Answer

Monetary validation occurs when a central bank, like the Bank of Canada, adjusts monetary policy (e.g., reducing interest rates) to accommodate or validate an increase in aggregate demand, such as that caused by higher oil prices.

Suppose That an Increase in World Oil Prices Leads to Greater