If the Bank of Canada Validates a Positive AD Shock

question 51

Multiple Choice

If the Bank of Canada validates a positive AD shock,

• A)there is the risk of continued inflation.
• B)the AD curve will shift to the left and inflation will stop.
• C)it will have eliminated the possibility of a continued inflation.
• D)output will fall more rapidly than if the shock had not been validated.
• E)wages will fall to reduce the resulting unemployment.

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