If the Bank of Canada Announced a Policy to Reduce

question 73

Multiple Choice

If the Bank of Canada announced a policy to reduce inflation and people found it credible, what would happen to the short-run Phillips curve and the sacrifice ratio?

• A) The short-run Phillips curve would shift right, and the sacrifice ratio would fall.
• B) The short-run Phillips curve would shift right, and the sacrifice ratio would rise.
• C) The short-run Phillips curve would shift left, and the sacrifice ratio would fall.
• D) The short-run Phillips curve would shift left, and the sacrifice ratio would rise.

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Definitions:

Cholecystokinin

A hormone secreted by the small intestine that stimulates the release of digestive enzymes from the pancreas and bile from the gallbladder.

Leptin

A hormone produced by fat cells that helps to regulate body weight by inhibiting hunger and thereby reducing food intake.

Insulin

A substance secreted by the pancreas that controls levels of sugar in the blood by aiding in the absorption of glucose into the body's tissues.

Oxytocin

A hormone and neurotransmitter often called the "love hormone" for its role in social bonding, childbirth, and maternal behaviors.