Figure 12.2

-Refer to Figure 12.2.Suppose the economy is initially above potential GDP,and the actual inflation rate is greater than the expected inflation rate.If the Bank of Canada wants to achieve the goal of price stability,this would be represented by a movement on the Phillips curve from

Question

Figure 12.2
Figure 12.2 -Refer to Figure 12.2.Suppose the economy is initially above potential GDP,and the actual inflation rate is greater than the expected inflation rate.If the Bank of Canada wants to achieve the goal of price stability,this would be represented by a movement on the Phillips curve from A) point A to point B. B) point C to point B. C) point B to point A. D) point A to point B to point C.

Figure 12.2 -Refer to Figure 12.2.Suppose the economy is initially above potential GDP,and the actual inflation rate is greater than the expected inflation rate.If the Bank of Canada wants to achieve the goal of price stability,this would be represented by a movement on the Phillips curve from A) point A to point B. B) point C to point B. C) point B to point A. D) point A to point B to point C.

-Refer to Figure 12.2.Suppose the economy is initially above potential GDP,and the actual inflation rate is greater than the expected inflation rate.If the Bank of Canada wants to achieve the goal of price stability,this would be represented by a movement on the Phillips curve from

Quizplus · Accepted Answer

The Bank of Canada wants to achieve the goal of price stability, which means reducing inflation to the target rate. If the actual inflation rate is greater than the expected inflation rate, then the economy is above potential GDP. To reduce inflation, the Bank of Canada would need to move the economy to a point where the actual inflation rate is equal to the expected inflation rate. This would be represented by a movement on the Phillips curve from point A to point B.

Figure 12.2 -Refer to Figure 12.2.Suppose the Economy Is Initially Above Potential