Given Its Existing Policy Regime of "Inflation Targeting," the Bank

question 54

Multiple Choice

Given its existing policy regime of "inflation targeting," the Bank of Canada would likely react to a large positive aggregate demand shock by

• A)lowering the bank rate.
• B)buying bonds from the open market.
• C)increasing its target for the overnight interest rate.
• D)decreasing its target for the overnight interest rate.
• E)ignoring the shock and allowing the economy to adjust.

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Definitions:

Temporary

Describes something intended to last for only a limited period of time, not permanent.

Spotting Trends

The practice of identifying patterns or shifts in markets, consumer behaviors, or other areas over a period of time.

Repetitive Processes

Operations or activities that are performed in the same manner, allowing for efficiency and standardization, often found in manufacturing or production environments.

International Organization for Standardization

An independent, non-governmental international organization that develops and publishes global standards.