The Short- Run Policy Target Currently Used by the Bank

question 4

Multiple Choice

The short- run policy target currently used by the Bank of Canada is to set

• A)a target range for the overnight interest rate.
• B)a target range for the Canadian- U.S. exchange rate.
• C)a target for the core inflation rate.
• D)M2 = real GDP/M1
• E)a target range for the 5- year mortgage rate.

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Definitions:

Spring Scale

A scale that measures weight or force by the stiffness of springs.

Hooke's Law

A principle stating that the force needed to extend or compress a spring by some distance scales linearly with respect to that distance.

Inversely

In an opposite or reverse manner, often referring to the relationship where as one variable increases, another decreases.

Fifth Power

A number or variable raised to the exponent of five, indicating it is multiplied by itself four times.