Table 11.3 -Refer to Table 11.3.Consider the Hypothetical Information in the Table

question 14

Multiple Choice

Table 11.3
-Refer to Table 11.3.Consider the hypothetical information in the table above for potential real GDP, real GDP, and the price level in 2017 and in 2018 if the Bank of Canada does not use monetary policy.If the Bank of Canada wants to keep real GDP at its potential level in 2018, it should

• A)buy government securities.
• B)sell government securities.
• C)increase the desired reserve ratio.
• D)increase income taxes.
• E)raise the target for the overnight rate.

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Definitions:

Savings

The portion of income not spent on current consumption but kept aside for future use or investment.

Executive Compensation

Refers to the total package of pay and benefits offered to an organization's top executives, including salaries, bonuses, stock options, and other financial rewards.

Real Wage

The purchasing power of wages, considering the effects of inflation; the amount of goods and services that can be bought with the wages.

Natural Capital

The world's stocks of natural assets which include geology, soil, air, water, and all living things.