Suppose that in 2014 the Bank of Canada announced a policy of rapid growth in the money supply, but then put the brakes on money expansion without any announcement.And suppose in 2015 officials at the Bank of Canada announce again that an expansion is planned.What is the most likely result?
A) People will believe the second announcement because the conditions that created a need for the expansion are probably still in effect.
B) Even though the Bank of Canada failed to implement the expansion after the first announcement, people will believe the second announcement because they will believe the Bank of Canada still plans to implement the policy.
C) People will NOT believe the second announcement because they will believe that the conditions that created a need for the expansion must have changed since the first announcement.
D) People will have more uncertainty about the Bank of Canada following through on the policies it announces.

Question

Suppose that in 2014 the Bank of Canada announced a policy of rapid growth in the money supply, but then put the brakes on money expansion without any announcement.And suppose in 2015 officials at the Bank of Canada announce again that an expansion is planned.What is the most likely result?  
A) People will believe the second announcement because the conditions that created a need for the expansion are probably still in effect. 
B) Even though the Bank of Canada failed to implement the expansion after the first announcement, people will believe the second announcement because they will believe the Bank of Canada still plans to implement the policy. 
C) People will NOT believe the second announcement because they will believe that the conditions that created a need for the expansion must have changed since the first announcement. 
D) People will have more uncertainty about the Bank of Canada following through on the policies it announces.

Quizplus · Accepted Answer

The fact that the Bank of Canada made an announcement for rapid growth in money supply in 2014 but then did not follow through with it without any announcement will make people more uncertain about the Bank of Canada following through on its policies. Therefore, people will have more uncertainty about the Bank of Canada following through on the policies it announces in 2015.

Suppose That in 2014 the Bank of Canada Announced a Policy