What actions could the Bank of Canada take to achieve consistent growth in real GDP at 4 percent per year?
A) The Bank of Canada could increase in the growth rate of the money supply by 1 percent each year until the inflation rate was exactly equal to 4 percent.
B) The Bank of Canada could maintain a growth rate of the money supply of 4 percent, regardless of whether inflation was rising or falling in the economy.
C) The Bank of Canada could follow contractionary monetary policy that would reduce the overnight interest rate to zero so investment would rise consistently.
D) The Bank of Canada has no direct control over real GDP in the long run, so there are no actions it could take to achieve this goal.
E) The Bank of Canada could relax lending standards for the banking system.
Correct Answer:
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