In July 2015, the Bank of Canada reduce its policy rate to 0.5% in an effort to offset the negative effects of oil prices. The major risk associated with this move is
A) an increase in inflation.
B) a drop in the value of the Canadian dollar.
C) household debt will rise to unsustainable levels.
D) firm borrowing will continue to rise.
E) the low interest rates will cause house prices to fall.
Correct Answer:
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Q6: What is the natural rate of unemployment?
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