Which of the Following Statements Describes an Important Limitation of Monetary

question 11

Multiple Choice

Which of the following statements describes an important limitation of monetary policy?

• A)When the Bank of Canada tries to buy bonds, it is often unable to find a seller.
• B)It must be conducted through the chartered banking system, and the Bank of Canada cannot always make banks do what it wants them to do.
• C)When the Bank of Canada tries to sell bonds, it is often unable to find a buyer.
• D)It is conducted by people in Parliament who are under pressure to get re-elected.

---

Definitions:

Disposable Income

Fiscal assets at households' disposal for spending and saving after income taxes have been subtracted.

Consumption

Households' utilization of both products and services.

MPS

The marginal propensity to save, which is the fraction of additional income that is saved.

Disposable Income

The fiscal envelope for household spending and saving activity subsequent to income tax adjustments.