If the Bank of Canada Attempts to Continue Reducing Unemployment

question 198

Multiple Choice

If the Bank of Canada attempts to continue reducing unemployment by manipulating monetary policy, which of the following would you expect to see?

• A)The Bank of Canada will follow deflationary monetary policies.
• B)The Bank of Canada will follow inflationary monetary policies.
• C)The rate of inflation will fall as the Bank of Canada tries to reduce the unemployment rate.
• D)The Bank of Canada will reduce the natural rate of unemployment.
• E)The Bank of Canada will have to target inflation rates.

---

Definitions:

Wage Rate

The fixed amount of compensation paid to an employee for their services.

Workers

Individuals engaged in any form of employment, contributing labor to produce goods or provide services.

Marginal Productivity Theory

A principle in economics that explains how the value of an economic input is determined by its marginal productivity, suggesting that factors of production are paid at rates equal to their productivity at the margin.

Labor-Demand Schedule

A representation of the quantity of labor that employers are willing to hire at different wage rates.