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% 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 will 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 that goal.
E) The Bank of Canada could adopt a nominal GDP growth target; increasing inflation when the economy is growing slowly.
Correct Answer:
Verified
Q212: If the economy experiences a negative supply
Q228: If the Bank of Canada chose to
Q229: Why has the short-term nominal interest rate
Q230: Which of the following could decrease unemployment
Q231: Which of the following is not an
Q234: If the current unemployment rate is 5%,
Q235: As the leverage ratio increases, asset prices
Q236: Which of the following is an appropriate
Q237: In conducting monetary policy, how has the
Q242: One problem with deflation is that it
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents