The current approach to monetary policy is based on the new Keynesian model and is expressed in terms of the short-term nominal interest rate, such as the overnight interest rate in Canada and the federal funds rate in the United States.

Question

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The statement is true. The current approach to monetary policy in many countries, including Canada and the United States, is based on the new Keynesian model, which focuses on adjusting the short-term nominal interest rate to achieve macroeconomic goals such as inflation targets and output stabilization. The overnight interest rate in Canada and the federal funds rate in the United States are examples of the nominal interest rates that central banks use to implement their monetary policy.

The Current Approach to Monetary Policy Is Based on the New