If the Canadian economy is operating in the relatively flat portion of the SRAS and the U.S.government imposes a tariff on oil from the Alberta oil sands,what would the appropriate response of the Canadian authorities be?
A)imposing an export tariff on Canadian electricity
B)increasing profits taxes on oil companies operating in Canada
C)reducing employment subsidies
D)reducing the bank rate

Question

Quizplus · Accepted Answer

Reducing the bank rate would lower borrowing costs, stimulate investment and consumption, and help counteract the negative impact of the U.S. tariff on Canadian oil exports.

If the Canadian Economy Is Operating in the Relatively Flat