If the Bank of Canada decides to increase interest rates to fight off potential inflation,and their policy action keeps the inflation rate stable,then other things equal,this would result in
A) the IS curve shifting to the right.
B) the IS curve shifting to the left.
C) the MP curve shifting up.
D) the MP curve shifting down.

Question

Quizplus · Accepted Answer

An increase in interest rates by the Bank of Canada would result in the MP (Monetary Policy) curve shifting up, as higher interest rates represent a tighter monetary policy stance.

If the Bank of Canada Decides to Increase Interest Rates