Suppose Canadian Real GDP Is Equal to Potential GDP

question 115

Multiple Choice

Suppose Canadian real GDP is equal to potential GDP.A significant and sustained appreciation of the Canadian dollar would likely lead the Bank to engage in an expansionary monetary policy if the Bank's policy experts traced the cause of the appreciation to

• A)a decrease in the overnight lending rate.
• B)an increase in the desire of non-residents to purchase Canadian financial assets.
• C)an increase in the desire of non-residents to purchase more Canadian goods and services.
• D)a reduction in Canada's core inflation rate.
• E)a recession in Canada.

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Definitions:

Natural Monopoly

A market condition where a single supplier is most efficient in producing the good due to the high fixed or start-up costs associated with the industry.

Entire Range

The complete spectrum or scope of something, from one end to the other, without any exclusions.

Public Interest Theory

A theory suggesting that government regulation is driven by the need to protect the public from market failures and ensure the well-being of society.

Natural Monopoly

A market condition in which a single company can supply a product or service at a lower cost than any potential competitor, leading to a dominant position that discourages others from entering the market.