Suppose Canadian Real GDP Is Equal to Potential GDP

question 89

Multiple Choice

Suppose Canadian real GDP is equal to potential GDP.An appreciation of the Canadian dollar then implies that the Bank of Canada should engage in

• A)a loosening of monetary policy because of the excess demand for Canadian products that is creating the appreciation.
• B)a tightening of monetary policy because of the excess demand for Canadian products that is creating the appreciation.
• C)no change in monetary policy because the exchange rate is always allowed to float freely.
• D)an increase in inflation because of the higher cost of imports.
• E)either a contractionary or an expansionary policy,depending on the cause of the appreciation.

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Definitions:

Epidermis

The outermost layer of skin, which serves as a waterproof barrier and creates our skin tone.

Integumentary

Referring to the integumentary system, which consists of the skin and its associated structures such as hair, nails, and glands, serving to protect the body.

Melanin

A pigment that gives color to the skin, hair, and eyes.

Brown-black Pigment

Melanin, the natural substance in the body that gives color to the skin, hair, and eyes, and offers protection against UV radiation.