Since the Bank of Canada can estimate ________ only approximately,it has only a rough idea of the level of ________,and therefore does not know with certainty how much to change ________.
A) interest rates;the overnight rate;the overnight rate target
B) potential output;the output gap;interest rates
C) planned aggregate expenditure;the output gap;the GDP growth rate
D) GDP;planned aggregate expenditure;interest rates
E) the output gap;GDP;interest rates

Question

Quizplus · Accepted Answer

The Bank of Canada estimates the output gap, which is the difference between actual and potential output, only approximately, so it has a rough idea of the level of the output gap. Therefore, it does not know with certainty how much to change interest rates. The other options do not fit the given statement.

Since the Bank of Canada Can Estimate ________ Only Approximately,it