In reality, the Bank of Canada is unable to use monetary policy to keep real GDP exactly at its potential level.

Question

Quizplus · Accepted Answer

The Bank of Canada can use monetary policy to influence the level of real GDP, but there are many factors that affect the economy and it is impossible to keep real GDP exactly at its potential level. Fluctuations in external factors such as global economic conditions, natural disasters, and political events can all impact the economy and make it difficult to precisely control real GDP.

In Reality, the Bank of Canada Is Unable to Use