Suppose Canadian Real GDP Is Equal to Potential GDP

question 28

Multiple Choice

Suppose Canadian real GDP is equal to potential GDP. A significant and sustained appreciation of the Canadian dollar would likely lead the Bank to engage in a contractionary monetary policy if the Bank's policy experts traced the cause of the appreciation to

• A)a reduction in Canada's core inflation rate.
• B)a decrease in the overnight lending rate.
• C)an increase in the desire of non- residents to purchase Canadian financial assets.
• D)a recession in Canada.
• E)an increase in the desire of non- residents to purchase more Canadian goods and services.

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