If Policy Makers Wanted to Use Both Monetary and Fiscal

question 57

Multiple Choice

If policy makers wanted to use both monetary and fiscal policy to help reduce a high rate of inflation,which of the following would be most appropriate?

• A)a larger budget deficit, the purchase of securities in the open market by the Bank of Canada, and a higher bank rate
• B)a government budget surplus, the purchase of securities in the open market by the Bank of Canada, and a lower bank rate
• C)a larger government budget deficit, the sale of securities in the open market by the Bank of Canada, and a lower bank rate
• D)a government budget surplus, the sale of securities in the open market by the Bank of Canada, and a higher bank rate

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Definitions:

Coefficient Of Variation

The coefficient of variation is a standardized measure of dispersion of a probability distribution or frequency distribution, expressed as a percentage of the mean.

Empirical Rule

A statistical principle that indicates almost all values in a normal distribution lie within three standard deviations from the average.

Standard Deviation

A measure of the amount of variation or dispersion of a set of values.

Interquartile Range

The difference between the third quartile (75th percentile) and the first quartile (25th percentile), a measure of variability that indicates the spread of the middle 50% of a dataset.