One Problem with Focusing on the CPI When Conducting Monetary

question 79

Multiple Choice

One problem with focusing on the CPI when conducting monetary policy is that

• A)many elements in the CPI change for reasons unrelated to the state of the Canadian economy.
• B)it is closely related to the value of M2.
• C)changes in monetary policy have little effect on the CPI,especially in the long run.
• D)the CPI is too stable to accurately reflect the changes occurring in the Canadian economy.
• E)the CPI distorts the value of commercial bank reserves.

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