The Bank of Canada explains the transmission mechanism for monetary policy in terms of:
A) a change in interest rates and exchange rates causing changes in demand, costs and prices and inflation.
B) a change in money supply somehow changing the inflation rate.
C) a change in government expenditure causing changes in demand, costs and prices and inflation.
D) a change in interest rates and exchange rates causing changes in government budget balances and debt ratios.

Question

Quizplus · Accepted Answer

The Bank of Canada describes the transmission mechanism for monetary policy as a process where changes in interest rates and exchange rates influence demand, costs, prices, and ultimately inflation. This approach emphasizes the direct impact of monetary policy on the economy through the cost of borrowing and the value of the currency.

The Bank of Canada Explains the Transmission Mechanism for Monetary