In general, the Bank of Canada has NOT embraced a fixed-growth-rate monetary policy.Why is this the case?
A) because the Bank of Canada directors would lose their jobs if a fixed-growth-rate monetary policy was adopted
B) because no influential economists have yet come out in favour of a fixed-growth-rate monetary policy
C) because the Bank of Canada prefers active fiscal policy
D) because the Bank of Canada directors believe the economy is too complex and too changeable to make a fixed-growth-rate monetary policy work consistently

Question

In general, the Bank of Canada has NOT embraced a fixed-growth-rate monetary policy.Why is this the case?  
A) because the Bank of Canada directors would lose their jobs if a fixed-growth-rate monetary policy was adopted 
B) because no influential economists have yet come out in favour of a fixed-growth-rate monetary policy 
C) because the Bank of Canada prefers active fiscal policy 
D) because the Bank of Canada directors believe the economy is too complex and too changeable to make a fixed-growth-rate monetary policy work consistently

Quizplus · Accepted Answer

The Bank of Canada directors believe that the economy is too complex and too changeable to make a fixed-growth-rate monetary policy work consistently. Therefore, they have not embraced a fixed-growth-rate monetary policy. A) is incorrect because the directors' jobs would not be at risk if a fixed-growth-rate policy was adopted. B) is incorrect because the lack of support from influential economists is not the reason why the Bank of Canada has not embraced a fixed-growth-rate monetary policy. C) is incorrect because the Bank of Canada's role is specifically focused on monetary policy, not fiscal policy.

In General, the Bank of Canada Has NOT Embraced a Fixed-Growth-Rate