If During the Past Decade the Average Rate of Monetary

question 47

Multiple Choice

If during the past decade the average rate of monetary growth has been 5 percent and the average inflation rate has been 5 percent, everything else held constant, when the Bank of Canada announces that the new rate of monetary growth will be 10 percent, the adaptive expectation forecast of the inflation rate is ________.

• A) 5 percent
• B) between 5 and 10 percent
• C) 10 percent
• D) more than 10 percent

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Definitions:

Rate of Return

The percentage of profit or loss on an investment over a period.

Guaranteed Rate

A promised or assured rate of return on an investment or loan.

Special Account

An account created for a specific, often non-routine, purpose, which may involve unique transactions or conditions.

Withdraw

The act of removing funds from a bank account or the action of retracting from a position or commitment.