Solved

What Actions Could the Bank of Canada Take to Achieve

Question 233

Multiple Choice

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:

verifed

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Related Questions

Unlock this Answer For Free Now!

View this answer and more for free by performing one of the following actions

qr-code

Scan the QR code to install the App and get 2 free unlocks

upload documents

Unlock quizzes for free by uploading documents