Of the Three Phases Involved in the Elimination of a Sustained

question 67

Multiple Choice

Of the three phases involved in the elimination of a sustained inflation in Canada, the second phase is characterized by

• A)the Bank of Canada slowing the rate of monetary expansion.
• B)increased inflation with rising output and falling unemployment.
• C)the Bank of Canada pursuing an expansionary monetary policy.
• D)aggregate output being returned to potential output.
• E)stagflation with falling output and continuing inflation.

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Definitions:

Consumer Price Index

A measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.

Base Year

A specific year chosen as a point of reference or standard of comparison for financial or economic data.

American Family

A social unit in the United States consisting of individuals related by blood, marriage, or adoption, characterized by diverse structures and cultural practices.

Sustained Deflation

A prolonged period in which the level of consumer prices decreases, indicating a reduction in the inflation rate below zero percent.