Suppose Canadian Real GDP Is Equal to Potential GDP

question 11

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

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Definitions:

Discrimination

Unfair treatment or prejudice against individuals or groups based on characteristics such as race, gender, age, or sexual orientation.

Symbolic Ethnicity

A nostalgic allegiance to the culture of the immigrant generation, or that of the old country, that is not usually incorporated into everyday behavior.

Irish Americans

Individuals in the United States who are descendants of Irish immigrants or identify strongly with Irish culture and heritage.

Herbert Gans

An American sociologist known for his work in urban sociology, planning, and public policy, especially focused on the lives of the urban poor.