Which of the following events would justify the Bank of Canada implementing an expansionary monetary policy, while maintaining its commitment to its inflation target?
A) The appreciation of the Canadian dollar due to increases in the world prices of oil and raw materials given the fact that Canada is a major producer and exporter of these goods.
B) The OPEC oil- price shocks that result in inflation.
C) The U.S. economy increasing its demand for Canadian goods and services.
D) The stock market crash following the terrorist attacks on September 11, 2001.
E) The depreciation of the Canadian dollar due to persistent current account deficits of Canada.
Correct Answer:
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