Canada's actual rate of inflation is fairly constant around the 2 percent level. We can conclude that

Question

Quizplus · Accepted Answer

The Bank of Canada uses monetary policy to keep inflation around the 2 percent level, meaning they are accommodating this level of inflation with increases or decreases in the money supply. If the economy consistently experienced an inflationary gap, then inflation would be increasing at a faster rate. Real GDP being above or below potential GDP and expectations about inflation being consistently wrong would not necessarily result in a constant level of inflation. The positive unemployment rate does not relate to the question.

Canada's Actual Rate of Inflation Is Fairly Constant Around the 2