Suppose the Bank of Canada Is Criticized for Implementing a Contractionary

question 95

Multiple Choice

Suppose the Bank of Canada is criticized for implementing a contractionary monetary policy at a time when the inflation rate is at or near its target level.One explanation for this policy decision is likely that

• A)the Bank regularly maintains a contractionary policy stance in order to keep inflation at or near its target.
• B)it is extremely difficult to predict future events and a contractionary policy is the safest policy choice.
• C)the Bank anticipates a decrease in Canadian net exports and is acting now because of the unavoidable time lags.
• D)the Bank anticipates a decrease in investment spending and is acting now because of the unavoidable time lags.
• E)the Bank anticipates a rise in inflation and is acting now because of the unavoidable time lags.

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Definitions:

Workers' Wages

The compensation paid to employees for their labor or services, typically calculated on an hourly, daily, or piecework basis.

Wage Reductions

Actions taken by employers to decrease the amount of money paid to workers, often in response to economic pressure or to increase profitability.

OPEC Price Increases

Refers to occasions when the Organization of Petroleum Exporting Countries decides to raise the price of oil, affecting global economies and energy costs.

Deregulation

The process of removing government restrictions and regulations in industries to improve efficiency and encourage competition.