Suppose Canadian Real GDP Is Equal to Potential GDP

question 97

Multiple Choice

Suppose Canadian real GDP is equal to potential GDP. A significant and sustained appreciation of the Canadian dollar on the foreign- exchange market then requires the Bank of Canada to

• A)engage in contractionary monetary policy to counter the rise in the dollar.
• B)increase the target band for the inflation rate.
• C)increase the target band for the overnight lending rate.
• D)engage in expansionary monetary policy to counter the rise in the dollar.
• E)identify the cause of the change in the exchange rate before taking any action to adjust policy.

---

Definitions:

Z > -1.82

A condition referring to the area under the normal distribution curve to the right of Z = -1.82, indicating values above this Z-score.

Median Score

The middle value in a data set when the values are arranged in ascending or descending order, effectively splitting the dataset into two halves.

Boxplot

A graphical representation of data that shows the distribution's five key summary points: minimum, first quartile, median, third quartile, and maximum.

Corresponding

Relating to or denoting elements or objects that are equivalent or similar in position, function, or characteristics.