The Bank of Canada can have difficulty distinguishing the minor ups and downs of the economy from a recession, as economic indicators may fluctuate and the severity of a recession may not be immediately clear. The Bank of Canada uses various indicators such as inflation rates, employment levels, and GDP to make policy decisions, but forecasting economic trends is complex and there is always a risk of incorrect timing or misjudgment.

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The Bank of Canada

Question 125

Multiple Choice

The Bank of Canada

A) can easily distinguish the minor ups and downs of the economy from a recession.
B) can have difficulty distinguishing the minor ups and downs of the economy from a recession.
C) always times its policy responses correctly.
D) can easily determine if a drop in production means a recession is inevitable.
E) is legally barred from collecting the data it needs to effectively intervene in the economy.

Correct Answer: