Suppose the Bank of Canada Is Criticized for Implementing a Contractionary

question 95

Multiple Choice

Suppose the Bank of Canada is criticized for implementing a contractionary monetary policy at a time when the inflation rate is at or near its target level.One explanation for this policy decision is likely that

• A)the Bank regularly maintains a contractionary policy stance in order to keep inflation at or near its target.
• B)it is extremely difficult to predict future events and a contractionary policy is the safest policy choice.
• C)the Bank anticipates a decrease in Canadian net exports and is acting now because of the unavoidable time lags.
• D)the Bank anticipates a decrease in investment spending and is acting now because of the unavoidable time lags.
• E)the Bank anticipates a rise in inflation and is acting now because of the unavoidable time lags.

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