The Bank of Canada has control over the long-term real interest rate provided that three variables remain unchanged.These three variables include all of the following,except
A) the expected rate of inflation.
B) the default premium.
C) term structure effects.
D) the short-term real interest rate.

Question

Quizplus · Accepted Answer

The Bank of Canada can influence the short-term real interest rate through its monetary policy tools, but it does not have direct control over the long-term real interest rate, which is influenced by market expectations and other factors.

The Bank of Canada Has Control Over the Long-Term Real