Which of the Following Benefits Flow from the Application of an Inflation-Control

question 76

Multiple Choice

Which of the following benefits flow from the application of an inflation-control target?

• A)If actual inflation exceeds the target range, the Bank of Canada can induce a recession to correct the matter.
• B)The monetary authorities can change the target range whenever they feel it is appropriate.
• C)People can make decisions with an understanding that inflation rates will remain relatively low.
• D)Financial market traders have a clearer understanding of the Bank of Canada's intentions.
• E)Both C and D

---

Definitions:

Posterior Probability

is the probability of the hypotheses given the observed data, calculated using Bayes' theorem.

Prior Probability

The likelihood of an event occurring before new evidence is taken into account.

Conditional Probability

The estimated probability of an event's occurrence when it is already known that another event has preceded it.

Thomas Bayes

An 18th-century British statistician and clergyman known for formulating the Bayes' Theorem, which describes the probability of an event based on prior knowledge.