Suppose Output Is at Its Potential Level and Then There

question 1

Multiple Choice

Suppose output is at its potential level and then there is a sudden increase in food and energy prices.This increase

• A)makes inflation targeting easier because it makes these problems less relevant.
• B)makes inflation targeting harder because these are closely related to excess demand in the economy.
• C)would be unlikely to lead to an immediate policy response because it would not appear in "core" inflation.
• D)would be offset by a decline in the Canadian dollar,making these price increases irrelevant.
• E)would lead to an immediate policy response to prevent the opening of an inflationary gap.

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Definitions:

Quakers

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Massachusetts

Massachusetts is a state in the northeastern United States, known for its significant historical events, educational institutions, and being a leader in healthcare, technology, and innovation.

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Anglican Church

The established state church of England, formed by Henry VIII after the Pope refused to annul his marriage to Catherine of Aragon.