What Actions Could the Bank of Canada Take to Achieve

question 23

Multiple Choice

What actions could the Bank of Canada take to achieve consistent growth in real GDP at 4 percent per year?

• A)The Bank of Canada could increase in the growth rate of the money supply by 1% each year until the inflation rate was exactly equal to 4 percent.
• B)The Bank of Canada could maintain a growth rate of the money supply of 4 percent, regardless of whether inflation was rising or falling in the economy.
• C)The Bank of Canada could follow contractionary monetary policy that would reduce the overnight interest rate to zero so investment will rise consistently.
• D)The Bank of Canada has no direct control over real GDP in the long run, so there are no actions it could take to achieve that goal.
• E)The Bank of Canada could adopt a nominal GDP growth target; increasing inflation when the economy is growing slowly.

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Definitions:

Land Redistribution

The process by which ownership of land is reallocated, often as a policy intended to equitize the distribution of agricultural land or to rectify historical imbalances in ownership.

Rural Freedmen

Refers to formerly enslaved African Americans who lived in rural areas of the Southern United States following the Civil War and Emancipation.

Fourteenth Amendment

An amendment to the United States Constitution, granting citizenship to all persons born or naturalized in the U.S. and guaranteeing all citizens equal protection of the laws.