Suppose the Bank of Canada is criticized for implementing a contractionary monetary policy at a time when the inflation rate is at or near its target level.One explanation for this policy decision is likely that
A) the Bank regularly maintains a contractionary policy stance in order to keep inflation at or near its target.
B) it is extremely difficult to predict future events and a contractionary policy is the safest policy choice.
C) the Bank anticipates a decrease in Canadian net exports and is acting now because of the unavoidable time lags.
D) the Bank anticipates a decrease in investment spending and is acting now because of the unavoidable time lags.
E) the Bank anticipates a rise in inflation and is acting now because of the unavoidable time lags.
Correct Answer:
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