-The chart shows that the nominal interest rate in Canada tends to be high when the inflation rate is high and low when the inflation rate is low.This pattern of behaviour of the nominal interest rate provides evidence that the ________ does operate in the Canadian economy.

Question

Quizplus · Accepted Answer

The Fisher effect describes the relationship between nominal interest rates and inflation rates, suggesting that nominal interest rates adjust to reflect expected inflation.

-The Chart Shows That the Nominal Interest Rate in Canada