Consider a Central Bank That Chooses to Implement Its Monetary

question 73

Multiple Choice

Consider a central bank that chooses to implement its monetary policy by expanding the money supply by a fixed percentage amount in every year.One important disadvantage with this approach to monetary policy is that it may

• A)lead to sustained inflation.
• B)be destabilizing if the demand for money is unstable.
• C)lead to stable growth of national income.
• D)be inconsistent with the Bank of Canada Act.
• E)create a recessionary output gap.

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Definitions:

Plants Producing

The process by which plants manufacture their own food, primarily through photosynthesis, contributing to the ecosystem's productivity.

Price of Gasoline

The cost per unit of gasoline, influenced by factors such as crude oil prices, taxes, demand, and supply.

TC Curves

They represent total cost curves, which show the total cost of producing different quantities of a good or service at various levels of production.

Sunk Cost

A cost that has already been incurred and cannot be recovered.